Checkout Satluj Jal Vidyut Nigam Limited IPO Information, Analysis and ratings before you buy IPO.
Incorporated in 1988, Satluj Jal Vidyut Nigam Limited (formerly Nathpa Jhakri Power Corporation Limited - NJPC) is a hydroelectric power generation company, originally established as a joint venture of the Government of India ( GOI ) and the Government of Himachal Pradesh (GOHP) to plan, investigate, organize, execute, operate and maintain Hydro-electric power projects.
Issue Open: April 29, 2010
Issue close: May 03, 2010
Price Band: Rs. 23 - Rs. 26 Per Equity Share
Minimum Bid Size: 250 Equity Shares
Face Value: Rs. 10 Per Equity Share
Issue Type: 100% Book Built Issue IPO
Maximum Subscription Amount for Retail Investor: Rs. 1,00,000
The shareholding stake of President of India, acting through the Ministry of Power, Government of India will be reduced to 64.47% from 74.50% post issue. The Governor, State of Himachal Pradesh holds 25.50% stake in the company.
IPO Grading / Rating:
CARE has assigned an IPO Grade 4 to Satluj Jal Vidyut Nigam Ltd (SJVNL) IPO . This means as per CARE, company has 'Above Average Fundamentals'.
Views of Aditya Birla Money stock trading broker on IPO
On the upper band of the issue price Rs 26, the company has priced its issue on a PE of 10.4x on its annualized earnings and P/BV of 1.58x on post-issue. By considering the factors such as : being one of the largest hydro power company trading at a relatively lower valuation compared to its peers, consistence financial performance & growing power demand, the issue price looks attractive. So, we recommend to buy ipo issue for long-term perspective.
Also Read: Satluj Jal Vidyut Nigam Limited IPO Information
European Debt Crisis Looming Over Stock Markets
The benchmark BSE Sensex shed over 300 points following slump in global markets due to European Debt Crisis woes. Rating agency S&P has lowered Greece’s credit rating to BB+ from BBB+ on Thursday and warned that bondholders could recover as little as 30% of their initial investment if the country restructures its debt. It also reduced Portugal by two steps to A- from A+.
With Greece inching closer to the brink of financial collapse, fear that the debt crisis will spread rattled markets for a second day Wednesday, while an extraordinary collection of global financial leaders gathered in Berlin to seek a solution.
Shares fell 2 percent or more across Europe and parts of Asia as investors increasingly wonder if Portugal, Spain and even Ireland may not be able to borrow the billions of dollars they need to finance their government spending.
Standard & Poor’s cut Greece’s debt to junk level on Tuesday, warning that bondholders could face losses of up to half of their holdings in a restructuring. The agency also downgraded Portugal’s debt by two notches.
Markets in Europe and on Wall Street fell sharply on Tuesday, and the trend continued in Asia Wednesday.
Japan’s Nikkei index was down 2.6 percent, while the Hang Seng index in Hong Kong was down 1.5 percent. In early trading Wednesday, the Euro Stoxx 50 index, a barometer of euro zone blue chips, was down more than 2 percent; it dropped 3.7 percent on Tuesday.
The euro fell to $1.3165, its lowest level of 2010, from $1.3175 late Tuesday.
Trading in U.S. index futures suggested Wall Street stocks would open lower.
The yield on Greece’s benchmark 10-year bonds soared 1.4 percentage points to 11.1 percent — more than three times that of benchmark German bonds and just below those issued by Pakistan.
The yield on benchmark bonds issued by Ireland, Spain, Italy and Portugal also rose Wednesday.
The cost of insuring Greece’s, Portugal’s and Spain’s debt against a default are also at record levels — a clear sign that investors are shunning them.
Read the entire story on European Debt Crisis in The New York Times here.
With Greece inching closer to the brink of financial collapse, fear that the debt crisis will spread rattled markets for a second day Wednesday, while an extraordinary collection of global financial leaders gathered in Berlin to seek a solution.
Shares fell 2 percent or more across Europe and parts of Asia as investors increasingly wonder if Portugal, Spain and even Ireland may not be able to borrow the billions of dollars they need to finance their government spending.
Standard & Poor’s cut Greece’s debt to junk level on Tuesday, warning that bondholders could face losses of up to half of their holdings in a restructuring. The agency also downgraded Portugal’s debt by two notches.
Markets in Europe and on Wall Street fell sharply on Tuesday, and the trend continued in Asia Wednesday.
Japan’s Nikkei index was down 2.6 percent, while the Hang Seng index in Hong Kong was down 1.5 percent. In early trading Wednesday, the Euro Stoxx 50 index, a barometer of euro zone blue chips, was down more than 2 percent; it dropped 3.7 percent on Tuesday.
The euro fell to $1.3165, its lowest level of 2010, from $1.3175 late Tuesday.
Trading in U.S. index futures suggested Wall Street stocks would open lower.
The yield on Greece’s benchmark 10-year bonds soared 1.4 percentage points to 11.1 percent — more than three times that of benchmark German bonds and just below those issued by Pakistan.
The yield on benchmark bonds issued by Ireland, Spain, Italy and Portugal also rose Wednesday.
The cost of insuring Greece’s, Portugal’s and Spain’s debt against a default are also at record levels — a clear sign that investors are shunning them.
Read the entire story on European Debt Crisis in The New York Times here.
Mandhana Industries IPO Information & Analysis
The IPO of Mandhana Industries opens today. The issue, which closes April 29, is price between Rs120 and Rs 130 per share.
MANDHANA INDUSTRIES LTD:
Incorporated in 1984, Mandhana Industries Limited is vertically integrated textile and garment manufacturing company in India having presence across operations ranging from yarn dyeing to garment manufacturing.
Issue Open: April 27, 2010
Issue close: April 29, 2010
Price Band: Rs. 120 - Rs. 130 Per Equity Share
Minimum Bid Size: 50 Equity Shares
Face Value: Rs. 10 Per Equity Share
Issue Type: 100% Book Built Issue IPO
Maximum Subscription Amount for Retail Investor: Rs. 1,00,000
The company plans to raise Rs 96.6-107.9 crore via the issue which will be used for setting up of a new garment manufacturing facility, and expansion of its yarn dyeing and weaving facility.
Mandhana is focussing on its garment business in overseas markets and strengthening apparel design. It is also expanding its geographic reach but has no plans of moving into the retail sector.
Background
Mandhana makes readymade garments and fabric. The former is slated for exports while the latter is sold in the domestic market. The mix between the two in total revenues is rather fluid, but domestic sales make up the chunk. Mandhana has an integrated manufacturing process, with capacities for dyeing and weaving of fabrics, and garments.
Sales recorded a 37 per cent compounded annual growth while net profits grew 44 per cent over a three-year period. Operating margins are on the healthy side at 19 per cent in FY-09, up from the 10 per cent three years earlier due to controls in manufacturing and administration costs.
Manufacturing expenses dropped from eating 14 per cent into revenues to 8 per cent in FY-09, primarily a result of its garment manufacturing plant kicking off production. Administration costs dropped to 3.5 per cent of sales in FY09 from the 7.3 per cent three years earlier. On the same grounds, margins further improved to 21 per cent for the nine months ended December 09. The company has no plans of moving into the retail sector, unlike a good many of its textile peers, which could help sustain margins at higher levels.
However, the company has a high dependence on few customers. Top 10 customers account for 55% of total revenues. It is yet to place orders for machinery. On the finances front, it had negative cash flows in FY08 and nine-months of FY10. It has also seen a sharp increase in debtors and advances paid.
Clients include those in the retail and apparel segment such as Tommy Hilfiger, Pepe Jeans, Valentino, and so on in the international market and Pantaloon, Aditya Birla Nuvo, Raymonds and so on in the domestic space. Repeat orders from such clients and their established presence provide a stable base.
Mandhana plans to use most of the funds raised to increase garment manufacturing capacity to 83 lakh pieces a year from its existing 47 lakh pieces and to double weaving production capacity to 360 lakh meters a year. The plants will be functional towards end-FY11, and revenues from the same will flow in from FY-12 onwards. Land for both has already been acquired.
Besides capacity expansion, funds raised will be used for working capital. Turnover of working capital stands at 2.8 times for FY-09, down from the 3 times a year earlier but still above industry peers.
Debt-equity ratio, post-issue, stands at 1.7 times, but most debt is under the Technology Upgradation Fund Scheme, which carry lower interest rates and longer repayment periods. Interest cover is at a good five times.
Crisil has given the issue a rating of three out of five, citing average fundamentals. Looking at recent IPO listings and they trading at below IPO pricing, investors should be cautious while buying IPO this time around.
MANDHANA INDUSTRIES LTD:Incorporated in 1984, Mandhana Industries Limited is vertically integrated textile and garment manufacturing company in India having presence across operations ranging from yarn dyeing to garment manufacturing.
Issue Open: April 27, 2010
Issue close: April 29, 2010
Price Band: Rs. 120 - Rs. 130 Per Equity Share
Minimum Bid Size: 50 Equity Shares
Face Value: Rs. 10 Per Equity Share
Issue Type: 100% Book Built Issue IPO
Maximum Subscription Amount for Retail Investor: Rs. 1,00,000
The company plans to raise Rs 96.6-107.9 crore via the issue which will be used for setting up of a new garment manufacturing facility, and expansion of its yarn dyeing and weaving facility.
Mandhana is focussing on its garment business in overseas markets and strengthening apparel design. It is also expanding its geographic reach but has no plans of moving into the retail sector.
Background
Mandhana makes readymade garments and fabric. The former is slated for exports while the latter is sold in the domestic market. The mix between the two in total revenues is rather fluid, but domestic sales make up the chunk. Mandhana has an integrated manufacturing process, with capacities for dyeing and weaving of fabrics, and garments.
Sales recorded a 37 per cent compounded annual growth while net profits grew 44 per cent over a three-year period. Operating margins are on the healthy side at 19 per cent in FY-09, up from the 10 per cent three years earlier due to controls in manufacturing and administration costs.
Manufacturing expenses dropped from eating 14 per cent into revenues to 8 per cent in FY-09, primarily a result of its garment manufacturing plant kicking off production. Administration costs dropped to 3.5 per cent of sales in FY09 from the 7.3 per cent three years earlier. On the same grounds, margins further improved to 21 per cent for the nine months ended December 09. The company has no plans of moving into the retail sector, unlike a good many of its textile peers, which could help sustain margins at higher levels.
However, the company has a high dependence on few customers. Top 10 customers account for 55% of total revenues. It is yet to place orders for machinery. On the finances front, it had negative cash flows in FY08 and nine-months of FY10. It has also seen a sharp increase in debtors and advances paid.
Clients include those in the retail and apparel segment such as Tommy Hilfiger, Pepe Jeans, Valentino, and so on in the international market and Pantaloon, Aditya Birla Nuvo, Raymonds and so on in the domestic space. Repeat orders from such clients and their established presence provide a stable base.
Mandhana plans to use most of the funds raised to increase garment manufacturing capacity to 83 lakh pieces a year from its existing 47 lakh pieces and to double weaving production capacity to 360 lakh meters a year. The plants will be functional towards end-FY11, and revenues from the same will flow in from FY-12 onwards. Land for both has already been acquired.
Besides capacity expansion, funds raised will be used for working capital. Turnover of working capital stands at 2.8 times for FY-09, down from the 3 times a year earlier but still above industry peers.
Debt-equity ratio, post-issue, stands at 1.7 times, but most debt is under the Technology Upgradation Fund Scheme, which carry lower interest rates and longer repayment periods. Interest cover is at a good five times.
Crisil has given the issue a rating of three out of five, citing average fundamentals. Looking at recent IPO listings and they trading at below IPO pricing, investors should be cautious while buying IPO this time around.
Best Midcap Stocks To Buy
Here are the three mid cap stocks Mehraboon Irani of Centrum Broking discussed recently on CNBC TV-18 channel. He is bullish on Dishman Pharma, Arshiya International and IndusInd Bank. He advises investors buy stocks of these midcaps for long term investment portfolio.
He himself and his clients are investing in stocks of these companies.
Dishman Pharma
One of the mid cap stocks to buy is Dishman Pharma. For the simple reason. The stock has done nothing over the last many months when most pharmaceutical stocks have gone up sharply.
Arshiya International
Arshiya International Limited is a supply chain and logistics infrastructure company. It offers end-to-end logistical support with total integration for global shipping services. It also develops five free trade warehousing zones (FTWZ).
IndusInd Bank
This is third of the midcap stocks to buy recommended by Mehraboon Irani in his CNBC TV-18 interview. Checkout the excerpts of his discussion on Indusind bank stock analysis and prospects for investing for long term investment portfolio.
He himself and his clients are investing in stocks of these companies.
Dishman Pharma
One of the mid cap stocks to buy is Dishman Pharma. For the simple reason. The stock has done nothing over the last many months when most pharmaceutical stocks have gone up sharply.
Arshiya International
Arshiya International Limited is a supply chain and logistics infrastructure company. It offers end-to-end logistical support with total integration for global shipping services. It also develops five free trade warehousing zones (FTWZ).
IndusInd Bank
This is third of the midcap stocks to buy recommended by Mehraboon Irani in his CNBC TV-18 interview. Checkout the excerpts of his discussion on Indusind bank stock analysis and prospects for investing for long term investment portfolio.
Best Midcap Banking Stock To Buy - IndusInd Bank
This is third of the midcap stocks to buy recommended by Mehraboon Irani in his CNBC TV-18 interview. Checkout the excerpts of his discussion on Indusind bank stock analysis and prospects for investing for long term investment portfolio.
" I have become fan of IndusInd Bank over the last one year and over the last two years after Ramesh Sobti and team of senior executives from ABN AMRO took over. That has been a sea change as far as the performance of IndusInd Bank goes. I have been meeting the management quite often and lots of conscious efforts are still being taken to improve the productivity efficiency and ultimately the bottomline of the bank.
The net NPA coming down to 0.6% and should fall down further, RoE at 16.87% at present can only move up further. As far as CASA goes, at 22%, not very impressive but not very bad—but if you look at the CASA over the last three-four-five quarters, it is just going up. The bank is taking much more efforts. The corporate internet transaction, which they have started, increased the branches from 200 to 300 can only improve CASA further.
The share is trading at less than three times its book value. I am aware of the fact as to what the bank is planning to do. I am quite confident that the numbers will be very pleasing to people. There are people arguing that valuation wise the bank has become little bit expensive but after the new management has taken over the bank’s valuation need to be expensive and will always be expensive.
So even at the present price, there is a lot of money to be made for shareholders over the longer-term. If somebody wants an exposure in the banking space and in a scenario where inflation are interest rates are becoming dirty words. I think IndusInd Bank is the stock to buy"
Go back to => Best Midcap Stocks To Buy
" I have become fan of IndusInd Bank over the last one year and over the last two years after Ramesh Sobti and team of senior executives from ABN AMRO took over. That has been a sea change as far as the performance of IndusInd Bank goes. I have been meeting the management quite often and lots of conscious efforts are still being taken to improve the productivity efficiency and ultimately the bottomline of the bank.
The net NPA coming down to 0.6% and should fall down further, RoE at 16.87% at present can only move up further. As far as CASA goes, at 22%, not very impressive but not very bad—but if you look at the CASA over the last three-four-five quarters, it is just going up. The bank is taking much more efforts. The corporate internet transaction, which they have started, increased the branches from 200 to 300 can only improve CASA further.
The share is trading at less than three times its book value. I am aware of the fact as to what the bank is planning to do. I am quite confident that the numbers will be very pleasing to people. There are people arguing that valuation wise the bank has become little bit expensive but after the new management has taken over the bank’s valuation need to be expensive and will always be expensive.
So even at the present price, there is a lot of money to be made for shareholders over the longer-term. If somebody wants an exposure in the banking space and in a scenario where inflation are interest rates are becoming dirty words. I think IndusInd Bank is the stock to buy"
Go back to => Best Midcap Stocks To Buy
Arshiya International - Lesser Known Logistics Stock To Buy
Arshiya International Limited is a supply chain and logistics infrastructure company. It offers end-to-end logistical support with total integration for global shipping services. It also develops five free trade warehousing zones (FTWZ).
During the fiscal year ended March 31, 2009, the Company’s business segments comprise: logistics operations and related services, container freight station (CFS)/ free trade warehousing (FTW) operations and related services, rail transport operations and others. Its subsidiaries include Arshiya Distripark Ltd, Arshiya Logistics Infrastructure Ltd, Arshiya Rail Infrastructure Ltd, Arshiya Supply Chain Management Private Limited and Arshiya International Singapore Pte Ltd.
The company has around six rail rigs operational at present and it should increase to around 10-12 over the next three-six months. The second story is free trade warehousing story in Mumbai. It should be operational over the next one-two months. They have recently approved of setting up another one in Nagpur, which is over 42-43 hectare and the one in Delhi should start become operational in the Q2 of 2010-11.
The only problem, which the company faces, is strain on its balance sheet. The company has got lot of capex plans. They have so far handled the financials pretty well but there is going to be strain on the balance sheet. That’s the only negative. The positive is that the company is out to redefine logistics and they have taken a step forward.
Arshiya should be reporting a net profit of around Rs 110 crore. For 2010-11, on an equity of 11 crore, face value of 2, the earnings per share works out to around Rs 20 and free trade warehousing zones is a big trigger for this company. If all goes well and if the company does implementation well, as so far it has done well, handles its finances well, then the strain on the balance sheet is taken care of.
The biggest positive as far as Arshiya goes is whenever I talk to investors, clients of us, about Arshiya, not many of them are still aware of the existence of this company in the logistics space. That very well shows that as far as our shareholding goes not many people are aware. It’s not very broadly based right now. Maybe over the next six-nine months we will be talking about Arshiya possibly as a different company.
Ref: Excerpts of discussion of Mehraboon Irani on Moneycontrol. (He is from Centrum Stock Trading Brokers)
Go back to => Best Midcap Stocks To Buy
During the fiscal year ended March 31, 2009, the Company’s business segments comprise: logistics operations and related services, container freight station (CFS)/ free trade warehousing (FTW) operations and related services, rail transport operations and others. Its subsidiaries include Arshiya Distripark Ltd, Arshiya Logistics Infrastructure Ltd, Arshiya Rail Infrastructure Ltd, Arshiya Supply Chain Management Private Limited and Arshiya International Singapore Pte Ltd.
The company has around six rail rigs operational at present and it should increase to around 10-12 over the next three-six months. The second story is free trade warehousing story in Mumbai. It should be operational over the next one-two months. They have recently approved of setting up another one in Nagpur, which is over 42-43 hectare and the one in Delhi should start become operational in the Q2 of 2010-11.
The only problem, which the company faces, is strain on its balance sheet. The company has got lot of capex plans. They have so far handled the financials pretty well but there is going to be strain on the balance sheet. That’s the only negative. The positive is that the company is out to redefine logistics and they have taken a step forward.
Arshiya should be reporting a net profit of around Rs 110 crore. For 2010-11, on an equity of 11 crore, face value of 2, the earnings per share works out to around Rs 20 and free trade warehousing zones is a big trigger for this company. If all goes well and if the company does implementation well, as so far it has done well, handles its finances well, then the strain on the balance sheet is taken care of.
The biggest positive as far as Arshiya goes is whenever I talk to investors, clients of us, about Arshiya, not many of them are still aware of the existence of this company in the logistics space. That very well shows that as far as our shareholding goes not many people are aware. It’s not very broadly based right now. Maybe over the next six-nine months we will be talking about Arshiya possibly as a different company.
Ref: Excerpts of discussion of Mehraboon Irani on Moneycontrol. (He is from Centrum Stock Trading Brokers)
Go back to => Best Midcap Stocks To Buy
Dishman Pharma - Pharma Sector Midcap Stock To Buy
One of the mid cap stocks to buy is Dishman Pharma. For the simple reason. The stock has done nothing over the last many months when most pharmaceutical stocks have gone up sharply.
Most pharmaceutical stocks have gone up a little bit too sharply with what happened in the US. But the fact is some of them have gone up sharply for reasons, which are right and some of them have gone up sharply for no reason. We are very positive on this company over the slightly longer-term because we see a sharp improvement in the turnover and the bottomline as far as 2011-12 goes.
Year 2009-10 was difficult for this company. The company is mainly in the contract research and manufacturing services (CRAMS) space. We know the CRAMS space is not a very comfortable space to be in as far as 2009-10 goes. Plus there was disruption of supply of active pharmaceutical ingredients (API) to Solvay because of restructuring at Solvay. But the management has given a very decent number for 2010-11 as far as Solvay goes.
Second, the company has incurred a lot of capex in the recent past. One of them was in Bavla for setting up an oncology unit, which should start giving the company very decent revenue starting from 2011-12 or rather from second half of 2010-11. Also unit setup in China should start production in 2010-11—it should start giving lovely bottomline and topline to the company in 2011-12.
This year is not a good year. We are looking at earnings around Rs 14-14.5. We should go up to around 18.75 in 2010-11 and to around Rs 26 in 2011-12. Buy stocks for next one-year for at least 30-40% investment returns.
Note: This stock recommendation is from Mehraboon Irani of Centrum Broking
Go back to => Best Midcap Stocks To Buy
Most pharmaceutical stocks have gone up a little bit too sharply with what happened in the US. But the fact is some of them have gone up sharply for reasons, which are right and some of them have gone up sharply for no reason. We are very positive on this company over the slightly longer-term because we see a sharp improvement in the turnover and the bottomline as far as 2011-12 goes.
Year 2009-10 was difficult for this company. The company is mainly in the contract research and manufacturing services (CRAMS) space. We know the CRAMS space is not a very comfortable space to be in as far as 2009-10 goes. Plus there was disruption of supply of active pharmaceutical ingredients (API) to Solvay because of restructuring at Solvay. But the management has given a very decent number for 2010-11 as far as Solvay goes.
Second, the company has incurred a lot of capex in the recent past. One of them was in Bavla for setting up an oncology unit, which should start giving the company very decent revenue starting from 2011-12 or rather from second half of 2010-11. Also unit setup in China should start production in 2010-11—it should start giving lovely bottomline and topline to the company in 2011-12.
This year is not a good year. We are looking at earnings around Rs 14-14.5. We should go up to around 18.75 in 2010-11 and to around Rs 26 in 2011-12. Buy stocks for next one-year for at least 30-40% investment returns.
Note: This stock recommendation is from Mehraboon Irani of Centrum Broking
Go back to => Best Midcap Stocks To Buy
Good mid cap IT stock to buy - KPIT Cummins Infosystems
A good mid cap stock to buy from IT sector with good valuations.
KPIT Cummins Infosystems provides business and technology solutions (Automotive, Semiconductor Solutions)through Business IT & Intelligence to BPO / KPO for the CTO, CIO and CFO of global customers from focused verticals.
In the last four-five months, the business environment and visibility for this company has improved a lot and even the dynamics and the way people look at this company has changed after acquisition of Sparta. KPIT is expected to have a good quarter ahead and expected revenue growth for KPIT is 7.7% quarter-on-quarter (QoQ) basis.
Market capitalization fir company is Rs 926.49 crore. The company touched its 52 week high Rs 142.15 and 52 week low Rs 32.40 on 18 Jan, 2010 and 08 Apr, 2009, respectively. Currently, it is trading -16.5% below its 52-week high and 266.36% above its 52-week low.
Company is likely to post an EPS of Rs 11.8 in FY10 and Rs 13.5 in FY11. At the CMP , the stock trades at a P/E of 9.8x on FY10E and 8.3x on FY11E.
The stock is moving along the upsloping support trendline. The strength of the stock’s uptrend is evident from the fact that it has not closed decisively below the trendline.
It is recommend to buy stocks of KPIT with a target price of Rs 140 in the short to medium term.
KPIT Cummins Infosystems provides business and technology solutions (Automotive, Semiconductor Solutions)through Business IT & Intelligence to BPO / KPO for the CTO, CIO and CFO of global customers from focused verticals.
In the last four-five months, the business environment and visibility for this company has improved a lot and even the dynamics and the way people look at this company has changed after acquisition of Sparta. KPIT is expected to have a good quarter ahead and expected revenue growth for KPIT is 7.7% quarter-on-quarter (QoQ) basis.
Market capitalization fir company is Rs 926.49 crore. The company touched its 52 week high Rs 142.15 and 52 week low Rs 32.40 on 18 Jan, 2010 and 08 Apr, 2009, respectively. Currently, it is trading -16.5% below its 52-week high and 266.36% above its 52-week low.
Company is likely to post an EPS of Rs 11.8 in FY10 and Rs 13.5 in FY11. At the CMP , the stock trades at a P/E of 9.8x on FY10E and 8.3x on FY11E.
The stock is moving along the upsloping support trendline. The strength of the stock’s uptrend is evident from the fact that it has not closed decisively below the trendline.
It is recommend to buy stocks of KPIT with a target price of Rs 140 in the short to medium term.
Satluj Jal Vidyut Nigam Limited IPO Information
Hydropower generator Satluj Jal Vidyut Nigam Limited (SJVN) is coming out with an initial public offering (IPO) of 41.5 crore equity shares on April 29, 2010. The offer will close on May 3, 2010.
The offer comprises a net offer to the public of 411,650,000 equity shares and a reservation of 3,350,000 equity shares for purchase by eligible employees at the offer price. The offer shall constitute 10.03% of the paid-up equity capital of company.
The shareholding stake of President of India, acting through the Ministry of Power, Government of India will be reduced to 64.47% from 74.50% post issue. The Governor, State of Himachal Pradesh holds 25.50% stake in the company.
The purpose of the offer is to achieve the benefits of listing on the stock exchanges and company will not receive any proceeds from the offer.
Read: Satluj Jal Vidyut Nigam Limited IPO Analysis & Ratings
It is a hydroelectric power generation company originally established as a joint venture between the Government and the state government of Himachal Pradesh to develop and operate the NJHPS. Based on information published by the CEA, the NJHPS is currently the largest operational hydroelectric power generation facility in India based on installed capacity, with an aggregate generation capacity of 1,500 MW, and is located on the Sutlej River in the state of Himachal Pradesh.
For the period of nine months ended of December 2009, it has reported net profit of Rs 775.37 crore on total income of Rs 1,510 crore; it has debt of Rs 1,769.90 crore on its books.
The offer comprises a net offer to the public of 411,650,000 equity shares and a reservation of 3,350,000 equity shares for purchase by eligible employees at the offer price. The offer shall constitute 10.03% of the paid-up equity capital of company.
The shareholding stake of President of India, acting through the Ministry of Power, Government of India will be reduced to 64.47% from 74.50% post issue. The Governor, State of Himachal Pradesh holds 25.50% stake in the company.
The purpose of the offer is to achieve the benefits of listing on the stock exchanges and company will not receive any proceeds from the offer.
Read: Satluj Jal Vidyut Nigam Limited IPO Analysis & Ratings
It is a hydroelectric power generation company originally established as a joint venture between the Government and the state government of Himachal Pradesh to develop and operate the NJHPS. Based on information published by the CEA, the NJHPS is currently the largest operational hydroelectric power generation facility in India based on installed capacity, with an aggregate generation capacity of 1,500 MW, and is located on the Sutlej River in the state of Himachal Pradesh.
For the period of nine months ended of December 2009, it has reported net profit of Rs 775.37 crore on total income of Rs 1,510 crore; it has debt of Rs 1,769.90 crore on its books.
Noida Toll Bridge Company Stock Analysis
Stock investment research team of Firstcall has recommended to buy stocks of Noida Toll Bridge Company with a price target of Rs 45 as against the stock price (CMP) of Rs 34.05 in its latest report.
Stock analysis and Investment Rationale from stock broking house:
``The Noida Toll Bridge Company (NTBCL) has been promoted by Infrastructure Leasing and Financial Services Ltd. (IL&FS) as a special purpose vehicle (SPV) to develop construct, operate and maintain the DND Flyway on a Build Own Operate Transfer (BOOT) basis.
At the current market price of Rs.34.05, the stock is trading at 21.27 x FY10E and 16.04 x FY11E respectively. Price to Book Value of the stock is expected to be at 1.51 x and 1.38 x respectively for FY10E and FY11E. Earning per share (EPS) of the company for the earnings for FY10E and FY11E is seen at Rs.1.60 and Rs.2.12 respectively.Net Sales of the company is expected to grow at a CAGR of 13% over 2008 to 2011E respectively.
The company has set up a 100% subsidiary, DND Flyway, for the implementation of development rights. Part of the surplus land on the Noida side has been transferred to the subsidiary. The contribution of the construction sector to India`s GDP is likely to increase in the coming years in light of the Government`s highway projects. These projects have thrown up fresh opportunities for NTBCL. On the basis of EV/EBITDA, the stock trades at 10.01 x for FY10E and 8.98 x for FY11E.
Firstcall, the stock trading broker expects that the company will keep its growth story in the coming quarters also. Hence recommendation to buy stocks of this particular scrip with a target price of Rs.45.00 in Medium to Long term investment portfolio.
Stock analysis and Investment Rationale from stock broking house:
``The Noida Toll Bridge Company (NTBCL) has been promoted by Infrastructure Leasing and Financial Services Ltd. (IL&FS) as a special purpose vehicle (SPV) to develop construct, operate and maintain the DND Flyway on a Build Own Operate Transfer (BOOT) basis.
At the current market price of Rs.34.05, the stock is trading at 21.27 x FY10E and 16.04 x FY11E respectively. Price to Book Value of the stock is expected to be at 1.51 x and 1.38 x respectively for FY10E and FY11E. Earning per share (EPS) of the company for the earnings for FY10E and FY11E is seen at Rs.1.60 and Rs.2.12 respectively.Net Sales of the company is expected to grow at a CAGR of 13% over 2008 to 2011E respectively.
The company has set up a 100% subsidiary, DND Flyway, for the implementation of development rights. Part of the surplus land on the Noida side has been transferred to the subsidiary. The contribution of the construction sector to India`s GDP is likely to increase in the coming years in light of the Government`s highway projects. These projects have thrown up fresh opportunities for NTBCL. On the basis of EV/EBITDA, the stock trades at 10.01 x for FY10E and 8.98 x for FY11E.
Firstcall, the stock trading broker expects that the company will keep its growth story in the coming quarters also. Hence recommendation to buy stocks of this particular scrip with a target price of Rs.45.00 in Medium to Long term investment portfolio.
Buy Stocks Of Blue Chip Companies At Discounted Price
If you were given a special “offer” of a 30 per cent discount on all Tata group shares relative to their current market prices, would you take it? How? Here's the article from The Hindu Business Line explaining how you can get blue chip stocks at discount!
Well, it is exactly such opportunities that you get to capture when you buy the holding or investment arms of India's key business groups. Take Bajaj Holdings and UB Holdings, the holding companies of the Bajaj and UB groups. They hold investment books which are worth Rs 16,000 crore and Rs 5,500 crore respectively at today's market prices. Yet the stocks sport market capitalisations that are at a steep discount to this value, at Rs 6,500 crore and Rs 1,800 crore respectively.
These are not odd cases, there seem to be many more instances where the holding or investment companies of business groups are trading at a steep discount to the real value of their investment book (the Net Asset Value, NAV).
As the Indian market continues to tread higher, investors are finding it harder to spot undervalued bets in the market.
The enormity of information available has also led to most of the undervalued stocks getting re-rated. However, one pocket of stocks which continue to trade at a steep discount to their intrinsic value are investment and holding companies of major business groups. In addition, there are also other companies (such as Ramco Industries and Aditya Birla Nuvo) with large investment books (quoted) which supplement their core business.
Business Line's analysis of these companies indicates that the companies trade at a steep discount to their NAV (ranging from 35 per cent to 80 per cent). They have also underperformed (in some cases delivered negative returns) the broader market index over the last four years.
From the investment data in the balance-sheets of listed companies, around 27 companies' market capitalisation is less than their respective investment book value. Of which, 14 companies are mainly holding and investment companies whereas others (such as Rajapalayam Mills and Binani Industries) also operate separate standalone businesses. The assumption is that these companies have not made material changes to their investment holdings since March 2009.
The stock market prices of holding and investment companies are all at a discount to the underlying value of investments they hold — with stock prices amounting to 20-65 per cent of their quoted investment book per share.
If unquoted investments are taken into account, the discount would widen in many cases.
Assuming that the companies have not liquidated their stakes since March 31, 2009, JSW Holding and Tata Investment Corporation are trading closest to their NAV, at a discount of 8 per cent and 24 per cent to their respective quoted portfolios. On the other hand, Williamson Magor (with major investments in Mcleod Russel, McNally Bharat and Eveready Industries) and Nagreeka Capital (with investments in Sterlite Industries) are trading at less than one-fifth of their investment book. Stocks such as UB Holdings and Nalwa Sons are trading at almost half their investment values. The discount seems to be wider for smaller rather than larger holding companies.
The implied discount may be even higher in some cases as the holding and investment companies may have cross-holdings.
For instance, JSW Holdings, apart from the steel portfolio, also has investments in Nalwa Sons, which is already at a discount to its own investment book.
Bajaj Holdings and Maharashtra Scooters have stakes in each other, in addition to investment in Bajaj Group stocks. Where there are multiple holding companies within a group, investors may find the one at a steeper discount a better bet. For instance, between Nalwa Sons and JSW Holdings, the discount in Nalwa Sons is higher as compared to JSW Holdings making it better value. Same is the case with McDowell Holding which is trading at a higher discount to its fair value compared to UB Holdings.
Gaining favour
Though the investment companies are available at an attractive discount, their long term stock performance hasn't been very encouraging. Over the last four years as the broader market index BSE 500 gave a 13 per cent annual return, quite a few holding companies and investment companies have given negative returns. JSW Holdings, Nalwa Sons and HB portfolios were exceptions with an annual return of 75 per cent, 27 per cent, and 14 per cent respectively.
However, the market does seem to be turning its attention to these companies. Some investment companies do seem to have gained market favour, delivering higher than market return (BSE 500) in the last one year.
For instance, UB Holdings and Maharashtra Scooters gained 260 per cent and 350 per cent respectively as against the 100 per cent return of BSE 500 index.
Good performance of the underlying stocks has been reflected in the stock price gains of Nalwa Sons and JSW Holdings which hold all the listed companies of the JSW group. HB Portfolio too has gained as it holds JP Associates, a high beta stock.
Analysis also shows that historically the discount on the holding companies narrowed more during periods of market correction (underlying companies' stocks falling) rather than during market highs. That is the underlying stocks have usually outperformed in a rising market and fallen more in a bearish market.
For instance, Nalwa Sons and Jindal South West Holdings saw their stocks trading at a premium to their underlying NAV of the stocks during the period January-March 2009, when JSW Steel, Jindal Stainless and Jindal Saw touched their multi-year lows. Why the discount?
Holding or investment companies may be a good way for investors to buy blue-chips at a discount.
However, not all of them may be good investment bets due to the discount factor alone. Here is what investors should watch out for while considering them:
For the holding company to be a good “buy” the underlying stocks should be worth investing in, the prospects of the underlying businesses should figure prominently in the investment decision.
Holding companies are similar to the perpetual close-ended mutual funds which have never paid dividends. Their stocks trade at a discount because the value of the investments is essentially on paper.
It is the promise of value unlocking that can really serve as a trigger for the discount to narrow. This can happen through periodic liquidation of holdings or a delisting of the company itself.
Even the dividends paid out by the holding companies are highly correlated to dividend received in turn from their holdings.
Concentration is another risk the investors have to bear in mind. Investing in a holding arm of a group means holding a number of companies from the same business group from different sectors.
For instance, by holding Tata Investment Corp an investor will end up tracking the whole Tata group portfolio.
However, given the choice investors may not want to bet on all the businesses at the same time. Same is the case with other holding companies too.
Source: The Hindu Business Line
Well, it is exactly such opportunities that you get to capture when you buy the holding or investment arms of India's key business groups. Take Bajaj Holdings and UB Holdings, the holding companies of the Bajaj and UB groups. They hold investment books which are worth Rs 16,000 crore and Rs 5,500 crore respectively at today's market prices. Yet the stocks sport market capitalisations that are at a steep discount to this value, at Rs 6,500 crore and Rs 1,800 crore respectively.
These are not odd cases, there seem to be many more instances where the holding or investment companies of business groups are trading at a steep discount to the real value of their investment book (the Net Asset Value, NAV).
As the Indian market continues to tread higher, investors are finding it harder to spot undervalued bets in the market.
The enormity of information available has also led to most of the undervalued stocks getting re-rated. However, one pocket of stocks which continue to trade at a steep discount to their intrinsic value are investment and holding companies of major business groups. In addition, there are also other companies (such as Ramco Industries and Aditya Birla Nuvo) with large investment books (quoted) which supplement their core business.
Business Line's analysis of these companies indicates that the companies trade at a steep discount to their NAV (ranging from 35 per cent to 80 per cent). They have also underperformed (in some cases delivered negative returns) the broader market index over the last four years.
From the investment data in the balance-sheets of listed companies, around 27 companies' market capitalisation is less than their respective investment book value. Of which, 14 companies are mainly holding and investment companies whereas others (such as Rajapalayam Mills and Binani Industries) also operate separate standalone businesses. The assumption is that these companies have not made material changes to their investment holdings since March 2009.The stock market prices of holding and investment companies are all at a discount to the underlying value of investments they hold — with stock prices amounting to 20-65 per cent of their quoted investment book per share.
If unquoted investments are taken into account, the discount would widen in many cases.
Assuming that the companies have not liquidated their stakes since March 31, 2009, JSW Holding and Tata Investment Corporation are trading closest to their NAV, at a discount of 8 per cent and 24 per cent to their respective quoted portfolios. On the other hand, Williamson Magor (with major investments in Mcleod Russel, McNally Bharat and Eveready Industries) and Nagreeka Capital (with investments in Sterlite Industries) are trading at less than one-fifth of their investment book. Stocks such as UB Holdings and Nalwa Sons are trading at almost half their investment values. The discount seems to be wider for smaller rather than larger holding companies.
The implied discount may be even higher in some cases as the holding and investment companies may have cross-holdings.
For instance, JSW Holdings, apart from the steel portfolio, also has investments in Nalwa Sons, which is already at a discount to its own investment book.
Bajaj Holdings and Maharashtra Scooters have stakes in each other, in addition to investment in Bajaj Group stocks. Where there are multiple holding companies within a group, investors may find the one at a steeper discount a better bet. For instance, between Nalwa Sons and JSW Holdings, the discount in Nalwa Sons is higher as compared to JSW Holdings making it better value. Same is the case with McDowell Holding which is trading at a higher discount to its fair value compared to UB Holdings.
Gaining favour
Though the investment companies are available at an attractive discount, their long term stock performance hasn't been very encouraging. Over the last four years as the broader market index BSE 500 gave a 13 per cent annual return, quite a few holding companies and investment companies have given negative returns. JSW Holdings, Nalwa Sons and HB portfolios were exceptions with an annual return of 75 per cent, 27 per cent, and 14 per cent respectively.
However, the market does seem to be turning its attention to these companies. Some investment companies do seem to have gained market favour, delivering higher than market return (BSE 500) in the last one year.
For instance, UB Holdings and Maharashtra Scooters gained 260 per cent and 350 per cent respectively as against the 100 per cent return of BSE 500 index.
Good performance of the underlying stocks has been reflected in the stock price gains of Nalwa Sons and JSW Holdings which hold all the listed companies of the JSW group. HB Portfolio too has gained as it holds JP Associates, a high beta stock.
Analysis also shows that historically the discount on the holding companies narrowed more during periods of market correction (underlying companies' stocks falling) rather than during market highs. That is the underlying stocks have usually outperformed in a rising market and fallen more in a bearish market.
For instance, Nalwa Sons and Jindal South West Holdings saw their stocks trading at a premium to their underlying NAV of the stocks during the period January-March 2009, when JSW Steel, Jindal Stainless and Jindal Saw touched their multi-year lows. Why the discount?
Holding or investment companies may be a good way for investors to buy blue-chips at a discount.
However, not all of them may be good investment bets due to the discount factor alone. Here is what investors should watch out for while considering them:
For the holding company to be a good “buy” the underlying stocks should be worth investing in, the prospects of the underlying businesses should figure prominently in the investment decision.
Holding companies are similar to the perpetual close-ended mutual funds which have never paid dividends. Their stocks trade at a discount because the value of the investments is essentially on paper.
It is the promise of value unlocking that can really serve as a trigger for the discount to narrow. This can happen through periodic liquidation of holdings or a delisting of the company itself.
Even the dividends paid out by the holding companies are highly correlated to dividend received in turn from their holdings.
Concentration is another risk the investors have to bear in mind. Investing in a holding arm of a group means holding a number of companies from the same business group from different sectors.
For instance, by holding Tata Investment Corp an investor will end up tracking the whole Tata group portfolio.
However, given the choice investors may not want to bet on all the businesses at the same time. Same is the case with other holding companies too.
Source: The Hindu Business Line
ULIPs And SEBI Ban - What ULIP Investors Should Do Now?
ULIPs are one of the most marketed investment products and highest selling too. Why? The only reason I see is, most of the ULIP investors are shown "heavens in future" by ULIP marketing agents and distributors. Why do they do so? For the sake of your better future ... is it? A BIG NO! It is for the sake of making their present better.
Commissions for ULIP marketing agents are in tune of 20-50% of your premium for first few years. (this changes company to company). Charges that ULIP company deducts from your initial investments would explain you this. Checkout your actually invested premium and charges deducted for any ULIP you might have invested in. I personally hate ULIPs for investments. The reason? Charges being charged by Insurance companies for ULIP investments are too high.
What is ULIP?
ULIP is nothing but Unit linked insurance plan. In simpler terms, ULIP provides you insurance PLUS investment. Investment in mutual fund like units. In a way it is mutual fund investment along with life insurance.
If you checkout the mutual fund charges, they are pretty less in comparison to ULIP charges. The best practice could be, buy term insurance if you want to have insurance cover and invest separately in mutual funds. This would save you the huge charges ULIP companies generally charge you. Combine the price of term insurance and mutual fund charges and you would see them at much lower levels than what insurance companies charge you for investing in ULIPs. New investors considering ULIPs for investment should consider this methodology before investing your hard earned money in ULIPs.
For existing ULIP investors
I found one very good informative article on ET website about SEBI ban on ULIPs and what existing investor's should do now? Check it out here.
Commissions for ULIP marketing agents are in tune of 20-50% of your premium for first few years. (this changes company to company). Charges that ULIP company deducts from your initial investments would explain you this. Checkout your actually invested premium and charges deducted for any ULIP you might have invested in. I personally hate ULIPs for investments. The reason? Charges being charged by Insurance companies for ULIP investments are too high.
What is ULIP?
ULIP is nothing but Unit linked insurance plan. In simpler terms, ULIP provides you insurance PLUS investment. Investment in mutual fund like units. In a way it is mutual fund investment along with life insurance.
If you checkout the mutual fund charges, they are pretty less in comparison to ULIP charges. The best practice could be, buy term insurance if you want to have insurance cover and invest separately in mutual funds. This would save you the huge charges ULIP companies generally charge you. Combine the price of term insurance and mutual fund charges and you would see them at much lower levels than what insurance companies charge you for investing in ULIPs. New investors considering ULIPs for investment should consider this methodology before investing your hard earned money in ULIPs.
For existing ULIP investors
I found one very good informative article on ET website about SEBI ban on ULIPs and what existing investor's should do now? Check it out here.
Stock Analysis Of Infosys Technologies With 1 Yr Target Price
Checkout the stock analysis based on recent results and the target price of Infosys for next one year.
Infosys Technologies Limited (Infosys) is a global technology services firm that defines, designs and delivers information technology (IT)-enabled business solutions to its clients. The Company provides end-to-end business solutions that leverage technology for its clients, including technical consulting, design, development, product engineering, maintenance, systems integration, package-enabled consulting, and implementation and infrastructure management services. Infosys also provides software products to the banking industry.
It seems that the company would fare better and the Q4FY10 numbers would be better than market expectations. FY11 would also be better with 13 – 15% revenue growth. The outlook is in line with NASSCOM's industry outlook for FY11.
The company has a track record of providing conservative guidance and this would be repeated in FY11 as well. It is expected that the USD revenue guidance for FY11 would be around 6% lower than market estimates, and the EPS guidance may be lower by 11%.This guidance gap may keep the stock quiet in the near term.
Growth beyond FY11 would also be better and this is the key for the long term view. The stock would bring in attractive returns over the long term.
Recommended to buy stocks of Infosys Technologies with a one year target price of Rs.3100. It is one of the good stock to buy for investment portfolio with high amount of safety associated with it.
Infosys Technologies Limited (Infosys) is a global technology services firm that defines, designs and delivers information technology (IT)-enabled business solutions to its clients. The Company provides end-to-end business solutions that leverage technology for its clients, including technical consulting, design, development, product engineering, maintenance, systems integration, package-enabled consulting, and implementation and infrastructure management services. Infosys also provides software products to the banking industry.
It seems that the company would fare better and the Q4FY10 numbers would be better than market expectations. FY11 would also be better with 13 – 15% revenue growth. The outlook is in line with NASSCOM's industry outlook for FY11.
The company has a track record of providing conservative guidance and this would be repeated in FY11 as well. It is expected that the USD revenue guidance for FY11 would be around 6% lower than market estimates, and the EPS guidance may be lower by 11%.This guidance gap may keep the stock quiet in the near term.
Growth beyond FY11 would also be better and this is the key for the long term view. The stock would bring in attractive returns over the long term.
Recommended to buy stocks of Infosys Technologies with a one year target price of Rs.3100. It is one of the good stock to buy for investment portfolio with high amount of safety associated with it.
Goldman Sachs Fraud - Effects On Stock Markets
Securities and Exchange Commission in US has filed a civil suit against Goldman Sachs accusing of securities fraud on Friday. World stock markets dropped considerably after this news. How is this going to affect Indian Stock Markets?
On Friday,it was reported that Goldman Sachs was sued by SEC, with the US market regulator alleging that Goldman had created and sold a complex investment product related to housing finance that was secretly devised to fail.
The news of the suit pulled down Goldman and other financial services stocks,which in turn affected the Dow Jones Index also. the Dow Jones industrial average was down 125.90 points (1.13%), at 11,018.66, while the Standard & Poor's 500 Index was down 19.54 points, (1.61%), at 1,192.13. The Nasdaq Composite Index was down 34.43 points,or 1.37%, at 2481.26.
Effects of Goldman Sachs Fraud on Indian Stock Markets
How much could this affect Indian Stock Markets? The sensex had rallied over 10% to above 18000 after budget in February 2010, but this week it has lost nearly 350 points to close at 17,591 on Friday. The stock brokers expect some profit taking on Monday. I believe it could be in tunes of 1 - 1.5% which translates into 170 - 200 points correction.
Stock market research analysts also feel the stocks of companies in which Goldman Sachs holds stake, could witness heightened selling on Monday. According to data collated by Bloomberg, the top five holdings for Goldman Sachs Invest Mauritius were LIC Housing Finance, Lanco Infra, CESC, United Phosphorus and Educomp Solutions.
Goldman Sachs' total investments in Indian stocks could be worth more than Rs 2,000 crore.
On Friday,it was reported that Goldman Sachs was sued by SEC, with the US market regulator alleging that Goldman had created and sold a complex investment product related to housing finance that was secretly devised to fail.
The news of the suit pulled down Goldman and other financial services stocks,which in turn affected the Dow Jones Index also. the Dow Jones industrial average was down 125.90 points (1.13%), at 11,018.66, while the Standard & Poor's 500 Index was down 19.54 points, (1.61%), at 1,192.13. The Nasdaq Composite Index was down 34.43 points,or 1.37%, at 2481.26.
Effects of Goldman Sachs Fraud on Indian Stock Markets
How much could this affect Indian Stock Markets? The sensex had rallied over 10% to above 18000 after budget in February 2010, but this week it has lost nearly 350 points to close at 17,591 on Friday. The stock brokers expect some profit taking on Monday. I believe it could be in tunes of 1 - 1.5% which translates into 170 - 200 points correction.
Stock market research analysts also feel the stocks of companies in which Goldman Sachs holds stake, could witness heightened selling on Monday. According to data collated by Bloomberg, the top five holdings for Goldman Sachs Invest Mauritius were LIC Housing Finance, Lanco Infra, CESC, United Phosphorus and Educomp Solutions.Goldman Sachs' total investments in Indian stocks could be worth more than Rs 2,000 crore.
Tata Investment Corp - Value Unlocking In Future
Tata Investment Corp (TIC) is the Tata Group's listed investment arm. It is an investmentt and holding company and operates like a close-ended mutual fund. It invests in the equity and debt securities of Indian companies, including those from the Tata group.
The company has invested in the equities of some of the most reputed names in India Inc, like, Reliance Industries, HDFC, Tata Steel, Infosys Technologies, Tata Motors, ACC, NTPC, Axis Bank, BHEL and L&T among others. It derives its income primarily from dividends and profits on the sale of investments.
The stock is trading at a significant discount to the value of its investment book, which comprises mainly of Tata Group companies. TIC is a good defensive option with low volatility, as the stock's beta against the BSE 500 is 0.43. This, coupled with steep discount to the underlying book value, reduces downside.
The company's December 2009 Net Asset Value (NAV) per share was Rs 765. At its current market price of Rs 508, the stock is trading at a 35 per cent discount even to this NAV. This discount is likely to be wider today as the company's top holdings (Tata Chemicals, Tata Steel, Tata Motors, Tata Tea, Voltas) have appreciated further from their December levels, on the back of improved prospects.
The company also holds unquoted investments in Tata Asset Management and National Stock Exchange which may provide significant scope for value unlocking as they are captured at cost.
Portfolio looking up
According to the 2008-09 Annual Report, quoted investments made up 52 per cent of the company's total investment book. Equity shares constituted 51 per cent of the total investment book. The proportion of equity has come down from 62 per cent in 2007-08 due to the stock market meltdown. Rest of the investment book comprises debentures, mutual funds and preference shares. The company's top-10 exposures include Tata Chemicals, Tata Steel, Tata Motors, Tata Tea, Voltas, Tata Power, Trent, Indian Hotels and Titan.
TIC increased its stake in Tata Motors, Tata Elxsi and Tata Steel in 2008 when the market was beating down these stocks. In 2008, TIC raised Rs 440 crore zero-coupon convertible bonds with warrants through a rights issue, for long-term investment.
Since then, a turnaround in the global environment has led to improving prospects for some of these companies, resulting in their gradual re-rating. However, the TIC stock price has tended to lag those held in its investment book and is still far from the peak levels of Rs 900 a share in January 2008.
Higher dividend payout is also a key investment argument in favour of this stock with the stock's recent dividend yield at 6 per cent.
There is also potential for dividend payouts to be increased as the company may book profits on certain investments it holds. It may also receive higher dividends from companies, as the underlying companies' profitability improved over the last few quarters.
The company may get Rs 275 crore of additional funding in 2011 post-warrants conversion of the rights issue. These shares will be allotted on payment of Rs 400 a warrant, which is well below the current market price.
The company has invested in the equities of some of the most reputed names in India Inc, like, Reliance Industries, HDFC, Tata Steel, Infosys Technologies, Tata Motors, ACC, NTPC, Axis Bank, BHEL and L&T among others. It derives its income primarily from dividends and profits on the sale of investments.
The stock is trading at a significant discount to the value of its investment book, which comprises mainly of Tata Group companies. TIC is a good defensive option with low volatility, as the stock's beta against the BSE 500 is 0.43. This, coupled with steep discount to the underlying book value, reduces downside.
The company's December 2009 Net Asset Value (NAV) per share was Rs 765. At its current market price of Rs 508, the stock is trading at a 35 per cent discount even to this NAV. This discount is likely to be wider today as the company's top holdings (Tata Chemicals, Tata Steel, Tata Motors, Tata Tea, Voltas) have appreciated further from their December levels, on the back of improved prospects.
The company also holds unquoted investments in Tata Asset Management and National Stock Exchange which may provide significant scope for value unlocking as they are captured at cost.
Portfolio looking up
According to the 2008-09 Annual Report, quoted investments made up 52 per cent of the company's total investment book. Equity shares constituted 51 per cent of the total investment book. The proportion of equity has come down from 62 per cent in 2007-08 due to the stock market meltdown. Rest of the investment book comprises debentures, mutual funds and preference shares. The company's top-10 exposures include Tata Chemicals, Tata Steel, Tata Motors, Tata Tea, Voltas, Tata Power, Trent, Indian Hotels and Titan.
TIC increased its stake in Tata Motors, Tata Elxsi and Tata Steel in 2008 when the market was beating down these stocks. In 2008, TIC raised Rs 440 crore zero-coupon convertible bonds with warrants through a rights issue, for long-term investment.
Since then, a turnaround in the global environment has led to improving prospects for some of these companies, resulting in their gradual re-rating. However, the TIC stock price has tended to lag those held in its investment book and is still far from the peak levels of Rs 900 a share in January 2008.
Higher dividend payout is also a key investment argument in favour of this stock with the stock's recent dividend yield at 6 per cent.
There is also potential for dividend payouts to be increased as the company may book profits on certain investments it holds. It may also receive higher dividends from companies, as the underlying companies' profitability improved over the last few quarters.
The company may get Rs 275 crore of additional funding in 2011 post-warrants conversion of the rights issue. These shares will be allotted on payment of Rs 400 a warrant, which is well below the current market price.
Small Cap Stock To Buy - Royal Orchid Hotels
Royal Orchid Hotels is a leading mid-size hospitality company that began its operations in 1973 in Bangalore. It has four different brands Royal Orchid (five-star business hotel),Royal Orchid Central (four-star business hotel),Royal Orchid Suites (four-star extended stay hotel) and Royal Orchid Resorts.
The company,along with its subsidiaries,joint ventures and associate companies today operates 13 hotels with over 1,050 rooms across seven locations five in Bangalore,two each in Mysore and Pune and one each in Hyderabad,Jaipur,Goa and Ahmedabad.
BUSINESS POTENTIAL:
Booming in the information technology (IT) sector in the 90s till early 2000 helped hotel players having presence in IT hubs,such as Bangalore,Hyderabad,make flourishing business due to increase in business travels. Among the few players,which have presence in Bangalore,Royal Orchid Hotels emerged as the chief beneficiary of the business travel to the IT city. The company came out with its initial public offering in 2006 and since then,it has expanded its base to Ahemdabad,Pune,Mumbai,and Goa. Though these cities are not specifically considered as IT hubs,the company wants to de-risk its dependence for growth on the IT sector. The company would explore into three more cities Jaipur,Hyderabad,and DelhiFY 11.The expansion has come at a time when occupancies at most destinations have shown an improvement. In the December quarter itself,the companys occupancy levels have bounced back to 50-70 % from lows of 30-40 % in the June 2009 quarter. In the December 09 quarter,occupancy rates in Bangalore increased from 52% to 55%,Pune from 70% to 74%,Mysore 58% to 68%,Jaipur from 65% to 75% and Goa from 35% to 59% on a quarter on quarter basis.It is reported that post-expansion the companys dependence on Bangalore would drop from the current 56% (of its revenues) to 31% the year ending March 2012.Most of these destinations the company has been associated with have been combinations of management contract,joint venture (with property owners,developers),lease and single ownership.
STOCK FINANCIALS:
The company's revenues in the past four years have grown at a compounded annual growth rate (CAGR) of 24%.Its operating profit has grown at a CAGR of around 13% in the past four years.A factor that would continue to form an important part of its revenue is the foreign exchange earnings.Many expatriates,IT professionals provide the company with earnings in foreign exchange (especially dollar).In fact,as of FY09,earnings from foreign earnings (Rs 47 crore) for the company account for 50% of total sales (Rs 94 crore).
STOCK VALUATIONs:
On the valuation front,currently, the company stock trades at price to earning multiple of around 26 times and almost at it book value. This is much cheaper than its peers Taj GVK Hotels,which is trading a P/E of 30x and nearly three times its book value. The company is on an expansion mode. It plans to invest around Rs 500 crore to double the number of hotels by FY12. The company may use the IPO proceedings to fund its expansion plans. It will take around two to three years for these investments to translate into good numbers for the company. With this expansion,the market is likely to re-rate the company as its fortunes will no longer be tied to the fate of Indian IT industry. Long term investors are advised to buy stocks of Royal orchid at current stock price level.
Source: ET Investor's Guide
The company,along with its subsidiaries,joint ventures and associate companies today operates 13 hotels with over 1,050 rooms across seven locations five in Bangalore,two each in Mysore and Pune and one each in Hyderabad,Jaipur,Goa and Ahmedabad.
BUSINESS POTENTIAL:
Booming in the information technology (IT) sector in the 90s till early 2000 helped hotel players having presence in IT hubs,such as Bangalore,Hyderabad,make flourishing business due to increase in business travels. Among the few players,which have presence in Bangalore,Royal Orchid Hotels emerged as the chief beneficiary of the business travel to the IT city. The company came out with its initial public offering in 2006 and since then,it has expanded its base to Ahemdabad,Pune,Mumbai,and Goa. Though these cities are not specifically considered as IT hubs,the company wants to de-risk its dependence for growth on the IT sector. The company would explore into three more cities Jaipur,Hyderabad,and DelhiFY 11.The expansion has come at a time when occupancies at most destinations have shown an improvement. In the December quarter itself,the companys occupancy levels have bounced back to 50-70 % from lows of 30-40 % in the June 2009 quarter. In the December 09 quarter,occupancy rates in Bangalore increased from 52% to 55%,Pune from 70% to 74%,Mysore 58% to 68%,Jaipur from 65% to 75% and Goa from 35% to 59% on a quarter on quarter basis.It is reported that post-expansion the companys dependence on Bangalore would drop from the current 56% (of its revenues) to 31% the year ending March 2012.Most of these destinations the company has been associated with have been combinations of management contract,joint venture (with property owners,developers),lease and single ownership.
STOCK FINANCIALS:
The company's revenues in the past four years have grown at a compounded annual growth rate (CAGR) of 24%.Its operating profit has grown at a CAGR of around 13% in the past four years.A factor that would continue to form an important part of its revenue is the foreign exchange earnings.Many expatriates,IT professionals provide the company with earnings in foreign exchange (especially dollar).In fact,as of FY09,earnings from foreign earnings (Rs 47 crore) for the company account for 50% of total sales (Rs 94 crore).
STOCK VALUATIONs:
On the valuation front,currently, the company stock trades at price to earning multiple of around 26 times and almost at it book value. This is much cheaper than its peers Taj GVK Hotels,which is trading a P/E of 30x and nearly three times its book value. The company is on an expansion mode. It plans to invest around Rs 500 crore to double the number of hotels by FY12. The company may use the IPO proceedings to fund its expansion plans. It will take around two to three years for these investments to translate into good numbers for the company. With this expansion,the market is likely to re-rate the company as its fortunes will no longer be tied to the fate of Indian IT industry. Long term investors are advised to buy stocks of Royal orchid at current stock price level.
Source: ET Investor's Guide
Mid Cap Stock Analysis - Aurobindo Pharma
Aurobindo Pharma has registered a robust growth in the past three-four quarters. Checkout stock analysis based on latest results.
The company offers a promising business model consisting of manufacturing generic drugs and active pharmaceutical ingredients (APIs) and contract manufacturing. The companys stock price has witnessed re-rating in the past one year and increased by nearly five times. Despite this run-up,this is an attractive growth stock to buy for the long term investment portfolio given that the earnings upside likely to accrue from the long-term supply contracts signed with pharma MNCs.
BUSINESS:
The Hyderabad-based drugmaker has transformed itself from a low-margin API manufacturer to a high margin formulations player.It has enriched its portfolio by adding life-style drugs to its traditional portfolio of antiinfective drugs.Aurobindo Pharma is an integrated low-cost manufacturer of generic drugs and APIs with globally approved manufacturing capabilities.It has a strong pipeline of abbreviated new drug applications (ANDAs) for generic formulations and drug master files (DMFs) for APIs in the US,Europe and South Africa.The drugmaker has a strong portfolio of anti-retroviral (anti-AIDS ) drugs.It is leveraging its strength by actively supplying to global tenders.The company has entered into a partnership deal with Pfizer for supplying injectibles in developed markets,such as US and Europe,and 70 other emerging markets.
STOCK FINANCIALS:
The companys net sales have grown at a compounded annual growth rate (CAGR) of 14.2% over the past five financial years to reach around Rs 3,077 crore in FY09.Net profits have rather grown in an erratic manner during the same period.Forex losses,high depreciation due to higher capex and interest costs have put the net profit under pressure in the recent past.Despite this,the company has been consistently paying dividend.It has incurred higher capex over the past three years.With its high investment phase over,the company will generate more free cash flows going forward.Aurobindos topline and bottomline have seen a marked improvement in the nine months ended December 2009.The operating margin has also been improving consistently.The companys high debt,repayment of which had been an issue for some time,no longer looks difficult.Having expanded its manufacturing facilities,the company has no major capex requirements in the coming years.
GROWTH OPPORTUNITIES:
Expansion of manufacturing capacities,vertical integration,building of a strong product pipeline,supply arrangement deal with Pfizer and the potential of similar such deals with other MNCs are going to ensure significant ramp up in companys revenues and earnings in the coming fiscals.Aurobindo Pharma has chalked out its near-term goals of continuing a strong performance in its addressable markets,shortening the time between product approvals and products launch,enhancing operating matrix at its manufacturing facilities and improving the cash flow.The company recently announced the creation of AuroSource a new division focussed on providing contract research and manufacturing (CRAMS) services ranging from pre-clinical to commercial launch of products.Despite being a late-entrant in the generics and CRAMS segment,the company aims to achieve revenues of $ 2 billion or around Rs 10,000 crore by FY14.
STOCK VALUATIONS:
Aurobindo Pharma's stock is currently trading at an attractive consolidated price to earnings value of 10.5.It is valued at around oneand-a-half times its past 12-month consolidated revenues of over Rs 3,500 crore.These are attractive valuations indicating further scope for appreciation in the stock price,as pharma companies are typically valued at over twice their revenues. Investors with a long-term horizon can consider buying stocks of Aurobindo.
Source: ET Investor's Guide
The company offers a promising business model consisting of manufacturing generic drugs and active pharmaceutical ingredients (APIs) and contract manufacturing. The companys stock price has witnessed re-rating in the past one year and increased by nearly five times. Despite this run-up,this is an attractive growth stock to buy for the long term investment portfolio given that the earnings upside likely to accrue from the long-term supply contracts signed with pharma MNCs.
BUSINESS:
The Hyderabad-based drugmaker has transformed itself from a low-margin API manufacturer to a high margin formulations player.It has enriched its portfolio by adding life-style drugs to its traditional portfolio of antiinfective drugs.Aurobindo Pharma is an integrated low-cost manufacturer of generic drugs and APIs with globally approved manufacturing capabilities.It has a strong pipeline of abbreviated new drug applications (ANDAs) for generic formulations and drug master files (DMFs) for APIs in the US,Europe and South Africa.The drugmaker has a strong portfolio of anti-retroviral (anti-AIDS ) drugs.It is leveraging its strength by actively supplying to global tenders.The company has entered into a partnership deal with Pfizer for supplying injectibles in developed markets,such as US and Europe,and 70 other emerging markets.
STOCK FINANCIALS:
The companys net sales have grown at a compounded annual growth rate (CAGR) of 14.2% over the past five financial years to reach around Rs 3,077 crore in FY09.Net profits have rather grown in an erratic manner during the same period.Forex losses,high depreciation due to higher capex and interest costs have put the net profit under pressure in the recent past.Despite this,the company has been consistently paying dividend.It has incurred higher capex over the past three years.With its high investment phase over,the company will generate more free cash flows going forward.Aurobindos topline and bottomline have seen a marked improvement in the nine months ended December 2009.The operating margin has also been improving consistently.The companys high debt,repayment of which had been an issue for some time,no longer looks difficult.Having expanded its manufacturing facilities,the company has no major capex requirements in the coming years.
GROWTH OPPORTUNITIES:
Expansion of manufacturing capacities,vertical integration,building of a strong product pipeline,supply arrangement deal with Pfizer and the potential of similar such deals with other MNCs are going to ensure significant ramp up in companys revenues and earnings in the coming fiscals.Aurobindo Pharma has chalked out its near-term goals of continuing a strong performance in its addressable markets,shortening the time between product approvals and products launch,enhancing operating matrix at its manufacturing facilities and improving the cash flow.The company recently announced the creation of AuroSource a new division focussed on providing contract research and manufacturing (CRAMS) services ranging from pre-clinical to commercial launch of products.Despite being a late-entrant in the generics and CRAMS segment,the company aims to achieve revenues of $ 2 billion or around Rs 10,000 crore by FY14.
STOCK VALUATIONS:
Aurobindo Pharma's stock is currently trading at an attractive consolidated price to earnings value of 10.5.It is valued at around oneand-a-half times its past 12-month consolidated revenues of over Rs 3,500 crore.These are attractive valuations indicating further scope for appreciation in the stock price,as pharma companies are typically valued at over twice their revenues. Investors with a long-term horizon can consider buying stocks of Aurobindo.
Source: ET Investor's Guide
Mid Cap Growth Stock - Gujarat Narmada Valley Fertilisers
The company has increased its profits in the past consecutive four quarters and has a series of new projects to be commissioned by the end of 2010. Checkout stock analysis.
The company's current valuations are likely to fully discount the failures of the past couple of years,which give a fair scope of recovery in the coming months.Long-term investors can hope for a sustained revival in the companys fortunes going ahead.
BUSINESS:
The Gujarat government-owned fertiliser and chemical company is Indias largest producer of basic chemicals,such as acetic acid and methanol and also produces value-added products such as toluene di-isocynate (TDI),calcium ammonium nitrate (CAN) and ammonium nitro phosphate (ANP).
The company has built a 6-storey building with 130,000 sq ft leasable area named InfoTower with necessary infrastructure targeting software companies.The company also operates in the IT space through its division named (n)Code Solutions,which provides eprocurement services,designs and builds world-class data centres,offers managed IT services including security services and egovernance solutions.
After a better performance in FY08,the company has been stagnating.Apart from the economic recession of FY09,its revenues and profits were hit by plant breakdowns. Recently,on February 10,2010,the company had another accident,damaging some of its critical equipment that have stalled its ammonia production that can be resumed only after another couple of months.The company has undertaken a comprehensive plan to be implemented over the next three years to prevent any such future failures.
GROWTH DRIVERS:
The company has outlined a capex programme of Rs 4,000 crore for upgradation and expansion of its manufacturing facilities.Under this programme,the companys nitric acid (WNA) capacity will go up by 37.5% and concentrated nitric acid (CAN) capacity by 50% while it adds a 35 MW captive power plant and 50,000 TPA ethyl acetate unit.
While these projects are scheduled to be completed by December 2010,two more projects will take 2-3 years to finish.The company is expanding its TDI capacity from the current 10,000 TPA to 60,000 TPA by the end of 2011 while the liquid fuel-based urea plant will be converted to natural gas by the end of 2012.
The company has also entered into a joint venture with other Gujarat government companies,such as GSFC and Gujarat Alkalis to set up a specialty chemicals complex at Dahej. A feasibility study is under way for the same
STOCK FINANCIALS:
The companys net sales have grown at a cumulative annualised growth rate (CAGR) of 20% between FY03 and FY08 while the net profit grew at 13.8%.However,since then,the profits have nearly halved for the year ended December 2009 while sales fell 23%.The company has steadily reduced its debt burden over the past five years to bring down the debt-equity ratio to 0.17 by the end of FY09 from 0.61 of FY05.During this period,the return on capital employed (RoCE) has consistently remained above 25% except in FY09,when it fell to 16.9%.The company has a strong history of cashflows from operations.Between FY01 and FY08,the operating cashflows were consistently higher than the cash used in investments,which reversed in FY09 with the company progressing ahead with its investment plans.
STOCK VALUATIONS:
At the current stock price, GNFC stock trades at a price-to-earnings multiple (P/E) of 9.8 based on its profits for the trailing 12 months. The share price has fallen below its book value of FY09. The current price fairly discounts the company's failures of the past couple of years. Investors my buy stocks for long term investment portfolio.
Source: ET Investor's Guide
The company's current valuations are likely to fully discount the failures of the past couple of years,which give a fair scope of recovery in the coming months.Long-term investors can hope for a sustained revival in the companys fortunes going ahead.
BUSINESS:
The Gujarat government-owned fertiliser and chemical company is Indias largest producer of basic chemicals,such as acetic acid and methanol and also produces value-added products such as toluene di-isocynate (TDI),calcium ammonium nitrate (CAN) and ammonium nitro phosphate (ANP).
The company has built a 6-storey building with 130,000 sq ft leasable area named InfoTower with necessary infrastructure targeting software companies.The company also operates in the IT space through its division named (n)Code Solutions,which provides eprocurement services,designs and builds world-class data centres,offers managed IT services including security services and egovernance solutions.
After a better performance in FY08,the company has been stagnating.Apart from the economic recession of FY09,its revenues and profits were hit by plant breakdowns. Recently,on February 10,2010,the company had another accident,damaging some of its critical equipment that have stalled its ammonia production that can be resumed only after another couple of months.The company has undertaken a comprehensive plan to be implemented over the next three years to prevent any such future failures.
GROWTH DRIVERS:
The company has outlined a capex programme of Rs 4,000 crore for upgradation and expansion of its manufacturing facilities.Under this programme,the companys nitric acid (WNA) capacity will go up by 37.5% and concentrated nitric acid (CAN) capacity by 50% while it adds a 35 MW captive power plant and 50,000 TPA ethyl acetate unit.
While these projects are scheduled to be completed by December 2010,two more projects will take 2-3 years to finish.The company is expanding its TDI capacity from the current 10,000 TPA to 60,000 TPA by the end of 2011 while the liquid fuel-based urea plant will be converted to natural gas by the end of 2012.
The company has also entered into a joint venture with other Gujarat government companies,such as GSFC and Gujarat Alkalis to set up a specialty chemicals complex at Dahej. A feasibility study is under way for the same
STOCK FINANCIALS:
The companys net sales have grown at a cumulative annualised growth rate (CAGR) of 20% between FY03 and FY08 while the net profit grew at 13.8%.However,since then,the profits have nearly halved for the year ended December 2009 while sales fell 23%.The company has steadily reduced its debt burden over the past five years to bring down the debt-equity ratio to 0.17 by the end of FY09 from 0.61 of FY05.During this period,the return on capital employed (RoCE) has consistently remained above 25% except in FY09,when it fell to 16.9%.The company has a strong history of cashflows from operations.Between FY01 and FY08,the operating cashflows were consistently higher than the cash used in investments,which reversed in FY09 with the company progressing ahead with its investment plans.
STOCK VALUATIONS:
At the current stock price, GNFC stock trades at a price-to-earnings multiple (P/E) of 9.8 based on its profits for the trailing 12 months. The share price has fallen below its book value of FY09. The current price fairly discounts the company's failures of the past couple of years. Investors my buy stocks for long term investment portfolio.
Source: ET Investor's Guide
Supreme Industries - Real ... Estate ... Story
The company has 18 office blocks available for sale out of which it has been able to sell only one so far.
THE 30% profit growth reported by leading plastic product manufacturer Supreme Industries has failed to impress investors as its share has remained more or less stagnant since the company declared its March 2010 quarter numbers last Friday. Lacklustre operating performance and the companys inability to complete the sale of its office property in Andheri in western Mumbai appear to be the main reasons behind the lukewarm investor response.
In the December 2009 quarter,Supreme Industries had clocked Rs 20.5 crore revenues from the sale of 13,106 sq ft of premises at an average realisation of Rs 15,600 per sq ft from its commercial complex in Andheri.At this rate,its 2.5-lakh sq ft commercial complex is valued at Rs 390 crore and investors expected a steady flow of revenues from the sale.
The profit growth during the quarter was primarily driven by extraordinary gain from the sale of companys land in Sewri in central Mumbai for Rs 3.72 crore.Excluding this,the companys operating performance was not very impressive.Despite a 15.4% sales growth at Rs 512 crore,operating profits grew a mere 3.3% as margins shrunk.Halving of interest cost to Rs 8 crore was the other key driver of profit growth.
In line with its restructuring efforts over the past couple of years,the company recently shifted its manufacturing unit for protective packaging from Nandesari in Gujarat to Pune in Maharashtra,which has left it with another piece of land worth Rs 1.5 crore that can be sold in future.
The company's operative performance,although uninspiring currently,could improve in future,as global polymer prices come under pressure with higher supplies from West Asia and China. Despite the strain on margins,the company has been consistently achieving volume growth.
Going forward,the sale of the companys Andheri property and excess land will continue to spice up its financial numbers. At the current stock price of Rs 510,the stock trades at a price-to earnings multiple (P/E) of 9, which appears reasonable. Investors can continue to hold the scrip for higher returns.
Source: Economic Times
THE 30% profit growth reported by leading plastic product manufacturer Supreme Industries has failed to impress investors as its share has remained more or less stagnant since the company declared its March 2010 quarter numbers last Friday. Lacklustre operating performance and the companys inability to complete the sale of its office property in Andheri in western Mumbai appear to be the main reasons behind the lukewarm investor response.
In the December 2009 quarter,Supreme Industries had clocked Rs 20.5 crore revenues from the sale of 13,106 sq ft of premises at an average realisation of Rs 15,600 per sq ft from its commercial complex in Andheri.At this rate,its 2.5-lakh sq ft commercial complex is valued at Rs 390 crore and investors expected a steady flow of revenues from the sale.
The profit growth during the quarter was primarily driven by extraordinary gain from the sale of companys land in Sewri in central Mumbai for Rs 3.72 crore.Excluding this,the companys operating performance was not very impressive.Despite a 15.4% sales growth at Rs 512 crore,operating profits grew a mere 3.3% as margins shrunk.Halving of interest cost to Rs 8 crore was the other key driver of profit growth.
In line with its restructuring efforts over the past couple of years,the company recently shifted its manufacturing unit for protective packaging from Nandesari in Gujarat to Pune in Maharashtra,which has left it with another piece of land worth Rs 1.5 crore that can be sold in future.
The company's operative performance,although uninspiring currently,could improve in future,as global polymer prices come under pressure with higher supplies from West Asia and China. Despite the strain on margins,the company has been consistently achieving volume growth.
Going forward,the sale of the companys Andheri property and excess land will continue to spice up its financial numbers. At the current stock price of Rs 510,the stock trades at a price-to earnings multiple (P/E) of 9, which appears reasonable. Investors can continue to hold the scrip for higher returns.
Source: Economic Times
Rakesh Jhunjhunwala Sells Entire Stake in Mid-day Multimedia
High profile stock trader and investor in Indian stocks, Rakesh Jhunjhunwala, has sold his entire stake in Mid-Day Multimedia.
The latter said in a statement on Friday, a day after rival Jagran Prakashan said it was in talks for a 'strategic alliance' with Mid-Day.
On Thursday, Jagran Prakashan's chief financial officer said the firm was in talks with Mid-day for a strategic alliance, and did not rule out the possibility of a stake buy.
Investor Rakesh Jhunjhunwala has sold 4.7 percent held by him and his wife in the open market on Thursday, according to a statement filed with the BSE. This means Rakesh does not holds Mid-day multimedia stocks anymore in his investment portfolio.
Checkout Rakesh Jhunjhunwala Portfolio here.
Why?
Rakesh Jhunjhunwala invested in the media firm in late 2004 and has been holding on to his 2.25 million shares all this while.
This is one investment ace investor Rakesh Jhunjhunwala would not be too proud off. The ace investor has sold all of his 4.26% stake (from five and half year old investment) in Mumbai-based media house Mid-day Multimedia almost at par.
The loss-making media house known for its local tabloid in Mumbai has not given any dividend since Jhunjhunwala invested so he would not have encashed much outside his directors fees at the board of the company.
Jhunjhunwala invested sometime in the September-December quarter of 2004 and had been holding on to his 2.25 million shares all this while. The shares are believed to have been purchased around Rs 30 a piece. Jhunjhunwala sold his entire shares on Thursday at an average price of around Rs 32, which could be at par with the original investment.
The stock had shot up soon after Jhunjhunwala invested and went on to hit all time high of Rs 118 in September’05, around the time the bull run was gaining pace. But it dropped down and never really could move up and had been more or less flat all this time.
The stock’s been in action over news that Jagran Prakashan (in which Blackstone has just picked an indirect stake for Rs 225 crore) is in talks to acquire a stake. The company has stated it is "In talks with various media partners and examining the possibilities for strategic & operational alliances. The company receives various proposals from media players for the alliances on a regular basis as it helps both the companies to expand and improve operating efficiencies, capabilities and reach. The Company would like to clarify that no specific decision has been taken in this regard."
The latter said in a statement on Friday, a day after rival Jagran Prakashan said it was in talks for a 'strategic alliance' with Mid-Day.
On Thursday, Jagran Prakashan's chief financial officer said the firm was in talks with Mid-day for a strategic alliance, and did not rule out the possibility of a stake buy.
Investor Rakesh Jhunjhunwala has sold 4.7 percent held by him and his wife in the open market on Thursday, according to a statement filed with the BSE. This means Rakesh does not holds Mid-day multimedia stocks anymore in his investment portfolio.
Checkout Rakesh Jhunjhunwala Portfolio here.
Why?
Rakesh Jhunjhunwala invested in the media firm in late 2004 and has been holding on to his 2.25 million shares all this while.
This is one investment ace investor Rakesh Jhunjhunwala would not be too proud off. The ace investor has sold all of his 4.26% stake (from five and half year old investment) in Mumbai-based media house Mid-day Multimedia almost at par.
The loss-making media house known for its local tabloid in Mumbai has not given any dividend since Jhunjhunwala invested so he would not have encashed much outside his directors fees at the board of the company.
Jhunjhunwala invested sometime in the September-December quarter of 2004 and had been holding on to his 2.25 million shares all this while. The shares are believed to have been purchased around Rs 30 a piece. Jhunjhunwala sold his entire shares on Thursday at an average price of around Rs 32, which could be at par with the original investment.
The stock had shot up soon after Jhunjhunwala invested and went on to hit all time high of Rs 118 in September’05, around the time the bull run was gaining pace. But it dropped down and never really could move up and had been more or less flat all this time.
The stock’s been in action over news that Jagran Prakashan (in which Blackstone has just picked an indirect stake for Rs 225 crore) is in talks to acquire a stake. The company has stated it is "In talks with various media partners and examining the possibilities for strategic & operational alliances. The company receives various proposals from media players for the alliances on a regular basis as it helps both the companies to expand and improve operating efficiencies, capabilities and reach. The Company would like to clarify that no specific decision has been taken in this regard."
Stocks To Buy For Your Investment Portfolio
Here are few stocks discussed by Rajen Shah of Angel stock broking on one of the business news channels. He has been advising investors to buy stocks discussed here for investment portfolio since long time.
Mid Cap Stock To Buy - MRF
A number of auto badgers are coming to India, Volkswagen has recently started, Nano is commencing operations in the next one-month from the Sanand plant and MRF is an exclusive supplier of small tyres. I am looking at very good times ahead for tyre industry and it is going to be there. So I don’t think I am worried about that Rs 150 per kg of RSS IV grade rubber which is used in the manufacturing of tyre. MRF should report easily Rs 900 kind of earnings and it is at 8 P/E multiple.
Large Cap Stock To Buy - ITC
Interesting things are happening in ITC. If you see the segment wise result, tobacco business reported almost 16% kind of an improvement in the bottomline in the last quarter and it is growing in double-digits. If you see the bidi market in India, it is three-four times the cigarette market. With more income in the hands of rural India, anybody would like to upgrade from a bidi to cigarette. This prosperity of India which is going to take place because of the economic growth is going to lead to double digit volumes growth in case of the cigarette business. That is one thing.
Mid Cap Stock Analysis - Ballarpur Industries Limited (BILT)
There were at least 4-5 reasons why we like this stock and one of them was two years back this company had bought back 38 crore shares at an aggregate price of Rs 25 pumping in Rs 940 crore. When a management is pumping in Rs 940 crore, which is one of the highest buybacks in the history of the Indian corporate sector, one shouldn’t have been bearish on this stock at all.
Mid Cap Stock To Buy - MRF
A number of auto badgers are coming to India, Volkswagen has recently started, Nano is commencing operations in the next one-month from the Sanand plant and MRF is an exclusive supplier of small tyres. I am looking at very good times ahead for tyre industry and it is going to be there. So I don’t think I am worried about that Rs 150 per kg of RSS IV grade rubber which is used in the manufacturing of tyre. MRF should report easily Rs 900 kind of earnings and it is at 8 P/E multiple.
Large Cap Stock To Buy - ITC
Interesting things are happening in ITC. If you see the segment wise result, tobacco business reported almost 16% kind of an improvement in the bottomline in the last quarter and it is growing in double-digits. If you see the bidi market in India, it is three-four times the cigarette market. With more income in the hands of rural India, anybody would like to upgrade from a bidi to cigarette. This prosperity of India which is going to take place because of the economic growth is going to lead to double digit volumes growth in case of the cigarette business. That is one thing.
Mid Cap Stock Analysis - Ballarpur Industries Limited (BILT)
There were at least 4-5 reasons why we like this stock and one of them was two years back this company had bought back 38 crore shares at an aggregate price of Rs 25 pumping in Rs 940 crore. When a management is pumping in Rs 940 crore, which is one of the highest buybacks in the history of the Indian corporate sector, one shouldn’t have been bearish on this stock at all.
Mid Cap Stock To Buy - MRF
This is one of the 3 stocks for investment portfolio recommended by Rajen Shah, Angel stock broking. MRF is an exclusive supplier of small tyres for Volkswagen, Tata Nano.
Here are excerpts of his discussion on one of the business news channels.
A number of auto badgers are coming to India, Volkswagen has recently started, Nano is commencing operations in the next one-month from the Sanand plant and MRF is an exclusive supplier of small tyres. I am looking at very good times ahead for tyre industry and it is going to be there. So I don’t think I am worried about that Rs 150 per kg of RSS IV grade rubber which is used in the manufacturing of tyre. MRF should report easily Rs 900 kind of earnings and it is at 8 P/E multiple.
I remember the times when it was said that cement is a commodity. Yes cement is a commodity and it deserves nothing more than 6-7 kind of P/E multiple. But when the scenario changes, when the demand is robust, when the profitability starts improving, all these factors like power cost, fuel cost, transportation cost, freight cost—everything gets absorbed.
We are extremely bullish even at the current prices of tyre stocks. Whether it is Apollo or MRF or Ceat or JK—we are extremely bullish on that. People are raising concern on rubber prices and crude moving up but I think the demand is so robust and there is a shortage of tyre. I have been interacting with many of the dealers of MRF. I have been interacting with people who have been in the retrading business and the indications I am getting from them and these are very reliable sources that the severe shortage of tyre and the kind of demand they are foreseeing is very robust.
I am seeing that times ahead for tyre industry, everything is going to get absorbed. There is no reason to worry about all these rubber prices and all that. The demand is very robust and that is going to see bottomline moving up. So even if they don’t make upon the margins, this 14% kind of margins which many of the companies reported are not at all sustainable but the fact is that volumes will make up.
So Rs 900 earnings for MRF—easily the stock can go up to Rs 10,000 and interestingly this is a highly under-owned stock. If you see frontline companies, FIIs holding 24%—in MRF FIIs hold not more than 1% stake.
So I think what is going to be underowned can be overowned. So the potential of the movement in companies like this will be immense. So Apollo, JK Tyres, even Ceat and MRF but our prime pick is MRF and Ceat.
Go back to >> Stocks To Buy For Your Investment Portfolio
Here are excerpts of his discussion on one of the business news channels.
A number of auto badgers are coming to India, Volkswagen has recently started, Nano is commencing operations in the next one-month from the Sanand plant and MRF is an exclusive supplier of small tyres. I am looking at very good times ahead for tyre industry and it is going to be there. So I don’t think I am worried about that Rs 150 per kg of RSS IV grade rubber which is used in the manufacturing of tyre. MRF should report easily Rs 900 kind of earnings and it is at 8 P/E multiple.
I remember the times when it was said that cement is a commodity. Yes cement is a commodity and it deserves nothing more than 6-7 kind of P/E multiple. But when the scenario changes, when the demand is robust, when the profitability starts improving, all these factors like power cost, fuel cost, transportation cost, freight cost—everything gets absorbed.
We are extremely bullish even at the current prices of tyre stocks. Whether it is Apollo or MRF or Ceat or JK—we are extremely bullish on that. People are raising concern on rubber prices and crude moving up but I think the demand is so robust and there is a shortage of tyre. I have been interacting with many of the dealers of MRF. I have been interacting with people who have been in the retrading business and the indications I am getting from them and these are very reliable sources that the severe shortage of tyre and the kind of demand they are foreseeing is very robust.
I am seeing that times ahead for tyre industry, everything is going to get absorbed. There is no reason to worry about all these rubber prices and all that. The demand is very robust and that is going to see bottomline moving up. So even if they don’t make upon the margins, this 14% kind of margins which many of the companies reported are not at all sustainable but the fact is that volumes will make up.
So Rs 900 earnings for MRF—easily the stock can go up to Rs 10,000 and interestingly this is a highly under-owned stock. If you see frontline companies, FIIs holding 24%—in MRF FIIs hold not more than 1% stake.
So I think what is going to be underowned can be overowned. So the potential of the movement in companies like this will be immense. So Apollo, JK Tyres, even Ceat and MRF but our prime pick is MRF and Ceat.
Go back to >> Stocks To Buy For Your Investment Portfolio
Large Cap Stock To Buy - ITC
This is one of the 3 stocks for investment portfolio recommended by Rajen Shah, Angel stock broking. Checkout analysis on this FMCG, Hotel, Cigarette, Apparel and Food giant.
Here are excerpts of his discussion on one of the business news channels.
I am extremely bullish on ITC. In fact about a year-and-a-half back when it was quoting at about Rs 185-190, I had given Rs 1,000 target in the next five years and I think already one and a half year is completed so in another three and a half years, my target for ITC is about Rs 1,000 per share. It would sound absolutely irrational talking about Rs 1,000 for ITC but I have the strongest conviction that this stock will be a four-figure stock in the next three-and-a-half years.
Interesting things are happening in ITC. Let me talk about the core business currently, which is tobacco. If you see the segment wise result, tobacco business reported almost 16% kind of an improvement in the bottomline in the last quarter and it is growing in double-digits. If you see the bidi market in India, it is three-four times the cigarette market. With more income in the hands of rural India, anybody would like to upgrade from a bidi to cigarette. This prosperity of India which is going to take place because of the economic growth is going to lead to double digit volumes growth in case of the cigarette business. That is one thing.
The hotel business will be doing very good numbers next year because of what is happening with the economy and the Commonwealth Games. The paper business—if you see Ballarpur—the number one paper company, was not able to report the kind of margins ITC reported in last quarter. Profits improved 80% in the last quarter as far as the paper segment-wise numbers.
Then we are talking about FMCG business where the losses have come down significantly and it is going to happen even in the coming quarters but the most interesting thing which I am observing in case of ITC and I think ITC will not be called a tobacco company in the next three-and-a-half years, it could be called India’s play on the agriculture space. I think the e-choupal concept—I had gone to Ludhiana, from Ludhiana I was travelling to Delhi via road and I came across this e-choupal thing, which is currently catering to about 25,000 villages and maybe they have target to cater it to about 3 lakh villages over the next five-six years.
This is a very interesting concept where the farmer walks in with his produce. He can see the international price, the domestic price and then sell the produce to ITC. ITC on its part basically use it for its own captive consumption. Like if red mirchi sold off, ITC grinds it and markets it under its own Ashirwad brand. So this is a big business. Whatever money the farmer makes, he uses it for buying something and from the same retail outlet. So ITC is basically doing what Pantaloon and Reliance and Bharti are doing in the urban part of the country. It is basically setting up these retail outlets in the rural part of the country and it makes money both ways.
When the farmer sells the produce to ITC and with that money the farmer buys something so there also it makes the margin. So it is a very interesting concept and I think even it is getting into contract farming – so I think it is a fabulous story and if you see the agribusiness of ITC, it is growing at 100%. Last year it reported about Rs 200 crore profits. This year it should be more than Rs 450 crore from the agribusiness. So I think agri is one thing which ITC should be doing exceptionally well.
We have a nine-month target of Rs 350 for ITC because this year ie for 2011, we are expecting about Rs 14 kind of earnings for ITC. But yes I stand by my words that in next three-and-a-half years, ITC will touch Rs 1,000.
Go back to >> Stocks To Buy For Your Investment Portfolio
Here are excerpts of his discussion on one of the business news channels.
I am extremely bullish on ITC. In fact about a year-and-a-half back when it was quoting at about Rs 185-190, I had given Rs 1,000 target in the next five years and I think already one and a half year is completed so in another three and a half years, my target for ITC is about Rs 1,000 per share. It would sound absolutely irrational talking about Rs 1,000 for ITC but I have the strongest conviction that this stock will be a four-figure stock in the next three-and-a-half years.
Interesting things are happening in ITC. Let me talk about the core business currently, which is tobacco. If you see the segment wise result, tobacco business reported almost 16% kind of an improvement in the bottomline in the last quarter and it is growing in double-digits. If you see the bidi market in India, it is three-four times the cigarette market. With more income in the hands of rural India, anybody would like to upgrade from a bidi to cigarette. This prosperity of India which is going to take place because of the economic growth is going to lead to double digit volumes growth in case of the cigarette business. That is one thing.
The hotel business will be doing very good numbers next year because of what is happening with the economy and the Commonwealth Games. The paper business—if you see Ballarpur—the number one paper company, was not able to report the kind of margins ITC reported in last quarter. Profits improved 80% in the last quarter as far as the paper segment-wise numbers.
Then we are talking about FMCG business where the losses have come down significantly and it is going to happen even in the coming quarters but the most interesting thing which I am observing in case of ITC and I think ITC will not be called a tobacco company in the next three-and-a-half years, it could be called India’s play on the agriculture space. I think the e-choupal concept—I had gone to Ludhiana, from Ludhiana I was travelling to Delhi via road and I came across this e-choupal thing, which is currently catering to about 25,000 villages and maybe they have target to cater it to about 3 lakh villages over the next five-six years.
This is a very interesting concept where the farmer walks in with his produce. He can see the international price, the domestic price and then sell the produce to ITC. ITC on its part basically use it for its own captive consumption. Like if red mirchi sold off, ITC grinds it and markets it under its own Ashirwad brand. So this is a big business. Whatever money the farmer makes, he uses it for buying something and from the same retail outlet. So ITC is basically doing what Pantaloon and Reliance and Bharti are doing in the urban part of the country. It is basically setting up these retail outlets in the rural part of the country and it makes money both ways.
When the farmer sells the produce to ITC and with that money the farmer buys something so there also it makes the margin. So it is a very interesting concept and I think even it is getting into contract farming – so I think it is a fabulous story and if you see the agribusiness of ITC, it is growing at 100%. Last year it reported about Rs 200 crore profits. This year it should be more than Rs 450 crore from the agribusiness. So I think agri is one thing which ITC should be doing exceptionally well.
We have a nine-month target of Rs 350 for ITC because this year ie for 2011, we are expecting about Rs 14 kind of earnings for ITC. But yes I stand by my words that in next three-and-a-half years, ITC will touch Rs 1,000.
Go back to >> Stocks To Buy For Your Investment Portfolio
Mid Cap Stock Analysis - Ballarpur Industries Limited (BILT)
This is one of the 3 stocks for investment portfolio recommended by Rajen Shah, Angel stock broking.
Here are excerpts of his discussion on one of the business news channels.
At every investor camp at around Rs 24-25 levels, we have been recommending this stock very strongly. There were at least 4-5 reasons why we like this stock and one of them was two years back this company had bought back 38 crore shares at an aggregate price of Rs 25 pumping in Rs 940 crore. When a management is pumping in Rs 940 crore, which is one of the highest buybacks in the history of the Indian corporate sector, one shouldn’t have been bearish on this stock at all. The stock did underperform significantly but then there was sheer value rate and it was just a matter of holding on to the stock and the gains were sure to follow. Now the gains are sure to follow from hereon.
The other interesting thing which happened in the last two months is that promoters have subscribed to about 10 crore shares—about 5.5 crore shares and about 4.5 crore warrants. This will increase the stake from 40% presently to about 49% in about 18 months and they are subscribing to this 10 crore share at an aggregate price of about Rs 30 pumping in Rs 300 crore. So when the management is buying back shares worth Rs 940 crore, pumping in 300 crore to scale up their holdings from 40% to 49%, I think that is no reason why we should doubt that the stock is overpriced or is going to languish.
One needs to get into it and hold on and the gains are sure to follow. Other interesting thing is that at a price of Rs 25 and even at the current price of Rs 32, Ballarpur is a one million tonne paper plant, you are getting it for about Rs 1,780 crore. If you were to set up a similar plant like Ballarpur with a capacity of 1 million tonne, you would require nothing less than Rs 3,000 crore. On a replacement value also you are getting it for about Rs 1,200 crore less than what otherwise would have been required for setting up a plant like Ballarpur.
Interestingly, what has happened is, in the first five decades, ever since Ballarpur commenced operation, the total capacity of Ballarpur was about 6 lakh tonne and over the last three years, they have almost doubled it to about 1 million tonne.
Hence huge investments went into this raising of the capacity from 6 lakh tonne to one million tonne and hence the interest cost went up, in the last quarter and the quarter prior to that we have seen depreciation going up. Now that this one million tonne capacity is into the market and with the paper prices doing very well—paper prices have moved up about 12.5% over the past six-seven months—this company is sure to encash on the increased capacity which is now coming into the play.
So interesting would be June 2011 and not June 2010—2011 it can go to the extent of reporting Rs 4.5 kind of earnings. We have a target of about Rs 45 in a year’s timeframe and maybe I think it could even go higher from those levels of Rs 45 but that depends upon how the company does perform in coming three-four quarters which we are looking at very keenly.
Go back to >> Stocks To Buy For Your Investment Portfolio
Here are excerpts of his discussion on one of the business news channels.
At every investor camp at around Rs 24-25 levels, we have been recommending this stock very strongly. There were at least 4-5 reasons why we like this stock and one of them was two years back this company had bought back 38 crore shares at an aggregate price of Rs 25 pumping in Rs 940 crore. When a management is pumping in Rs 940 crore, which is one of the highest buybacks in the history of the Indian corporate sector, one shouldn’t have been bearish on this stock at all. The stock did underperform significantly but then there was sheer value rate and it was just a matter of holding on to the stock and the gains were sure to follow. Now the gains are sure to follow from hereon.
The other interesting thing which happened in the last two months is that promoters have subscribed to about 10 crore shares—about 5.5 crore shares and about 4.5 crore warrants. This will increase the stake from 40% presently to about 49% in about 18 months and they are subscribing to this 10 crore share at an aggregate price of about Rs 30 pumping in Rs 300 crore. So when the management is buying back shares worth Rs 940 crore, pumping in 300 crore to scale up their holdings from 40% to 49%, I think that is no reason why we should doubt that the stock is overpriced or is going to languish.
One needs to get into it and hold on and the gains are sure to follow. Other interesting thing is that at a price of Rs 25 and even at the current price of Rs 32, Ballarpur is a one million tonne paper plant, you are getting it for about Rs 1,780 crore. If you were to set up a similar plant like Ballarpur with a capacity of 1 million tonne, you would require nothing less than Rs 3,000 crore. On a replacement value also you are getting it for about Rs 1,200 crore less than what otherwise would have been required for setting up a plant like Ballarpur.
Interestingly, what has happened is, in the first five decades, ever since Ballarpur commenced operation, the total capacity of Ballarpur was about 6 lakh tonne and over the last three years, they have almost doubled it to about 1 million tonne.
Hence huge investments went into this raising of the capacity from 6 lakh tonne to one million tonne and hence the interest cost went up, in the last quarter and the quarter prior to that we have seen depreciation going up. Now that this one million tonne capacity is into the market and with the paper prices doing very well—paper prices have moved up about 12.5% over the past six-seven months—this company is sure to encash on the increased capacity which is now coming into the play.
So interesting would be June 2011 and not June 2010—2011 it can go to the extent of reporting Rs 4.5 kind of earnings. We have a target of about Rs 45 in a year’s timeframe and maybe I think it could even go higher from those levels of Rs 45 but that depends upon how the company does perform in coming three-four quarters which we are looking at very keenly.
Go back to >> Stocks To Buy For Your Investment Portfolio
Mid Cap Stock Analysis - Gujarat Alkalies & Chemicals
Firstcall equity investment research team has recommended to hold stocks of Gujarat Alkalies & Chemicals.
Gujarat Alkalies & Chemicals has a price target of Rs 145 as against the market price (CMP) of Rs 125.70 in its report dated Apr. 06, 2010.
Gujarat Alkalies & Chemicals Ltd has informed that Credit Analysis & Research Ltd (CARE) retained rating of ``PR1+`` for Company`s Short Term Debt Programme / Commercial Paper (STD / CP) for an amount up to Rs. 1billion for one year.
At the current market price of Rs.125.70, the stock trades at 8.12 x FY10E and 6.91 x FY11E respectively. Price to Book Value of the stock is expected to be at 0.68 x and 0.62 x respectively for FY10E and FY11E. Earning per share (EPS) of the company for the earnings for FY10E and FY11E is seen at Rs.15.48 and Rs.18.19 respectively. On the basis of EV/EBITDA, the stock trades at 3.23 x for FY10E and 2.88 x for FY11E.
Stock investment research team of Firstcall recommends to `HOLD` this stock for a Target Price of Rs.145.00 as the final verdict from stock broking house.
Gujarat Alkalies & Chemicals has a price target of Rs 145 as against the market price (CMP) of Rs 125.70 in its report dated Apr. 06, 2010.
Gujarat Alkalies & Chemicals Ltd has informed that Credit Analysis & Research Ltd (CARE) retained rating of ``PR1+`` for Company`s Short Term Debt Programme / Commercial Paper (STD / CP) for an amount up to Rs. 1billion for one year.
At the current market price of Rs.125.70, the stock trades at 8.12 x FY10E and 6.91 x FY11E respectively. Price to Book Value of the stock is expected to be at 0.68 x and 0.62 x respectively for FY10E and FY11E. Earning per share (EPS) of the company for the earnings for FY10E and FY11E is seen at Rs.15.48 and Rs.18.19 respectively. On the basis of EV/EBITDA, the stock trades at 3.23 x for FY10E and 2.88 x for FY11E.
Stock investment research team of Firstcall recommends to `HOLD` this stock for a Target Price of Rs.145.00 as the final verdict from stock broking house.
Small Cap Stock Analysis - Archies
Many of you would have visited Archies store sometime in your life.
You must have seen youngsters visiting the store and making purchases regularly but did you ever thought to buy stocks of it? Let's have a look at the possibility of investing in stocks of Archies to be part of this market.
The Company is engaged in the business of retailing of gift items, greeting cards, perfumes and stationary items. The Company operates in three business segments: Greeting Cards, Stationery and Gifts. The Company's wholly owned subsidiary is Archies Online.Com Limited.
If we look at the income and sales turnover data, it shows us constant growth of ~15-20% on Y-O-Y basis since 2005. At the same time operating costs are also increasing in similar ration. The reported net profit was on constant increase till year 2008 but went in negative in year 2009. EPS too nosedived in similar manner from 12 to below zero levels.
If we look at the past 3 quarters (Jun - Dec. 09), sales and net profit is on constant increase. And so is the EPS. This EPS collectively for 3 quarters comes at 11.2 With March quarter numbers to be added, it could easily go above 14-15. If we take the forward EPS at say 14 levels, stock is trading at 6-7 PE ratio at CMP of 95 which is very attractive level from investment perspective.
Also, it's book value of Rs. 118 makes it an small cap value stock to buy at this level.
Looking at the stock value, attractive stock valuations, one may buy stocks as short to medium term investment with a target price of Rs. 140 - 150.
You must have seen youngsters visiting the store and making purchases regularly but did you ever thought to buy stocks of it? Let's have a look at the possibility of investing in stocks of Archies to be part of this market.The Company is engaged in the business of retailing of gift items, greeting cards, perfumes and stationary items. The Company operates in three business segments: Greeting Cards, Stationery and Gifts. The Company's wholly owned subsidiary is Archies Online.Com Limited.
If we look at the income and sales turnover data, it shows us constant growth of ~15-20% on Y-O-Y basis since 2005. At the same time operating costs are also increasing in similar ration. The reported net profit was on constant increase till year 2008 but went in negative in year 2009. EPS too nosedived in similar manner from 12 to below zero levels.If we look at the past 3 quarters (Jun - Dec. 09), sales and net profit is on constant increase. And so is the EPS. This EPS collectively for 3 quarters comes at 11.2 With March quarter numbers to be added, it could easily go above 14-15. If we take the forward EPS at say 14 levels, stock is trading at 6-7 PE ratio at CMP of 95 which is very attractive level from investment perspective.
Also, it's book value of Rs. 118 makes it an small cap value stock to buy at this level.
Looking at the stock value, attractive stock valuations, one may buy stocks as short to medium term investment with a target price of Rs. 140 - 150.
Small Cap Stock Analysis - Aditya Birla Chemicals
The stock valuations of Aditya Birla Chemicals has historically remained low,despite its strong profit margins,a healthy track record of cash generation and an improved balance sheet. A good small cap growth stock to buy. Checkout the stock analysis published in ET Investor's guide.
Although the company is operating in an industry that is currently in a downturn,long-term investors can consider the stock to benefit from the next upturn.
BUSINESS:
Aditya Birla Chemicals (India) (ABCIL),which was earlier known as Bihar Caustic,is a 51.3% subsidiary of Hindalco Industries with other promoter group companies holding additional 5%.The company is a leading producer of inorganic chemicals,such as caustic soda, chlorine, hydrogen and their derivatives including hydrochloric acid,aluminium chloride and bleaching powder. The company has its 105,000 tonne per annum (TPA) caustic soda plant along with 30MW captive power plant in Jharkhand. Caustic soda is used in industries such as pulp and paper,textiles,aluminium and detergents and the company has leading players like Hindalco,Balco,SRF,HUL and JK Paper as its clients.
GROWTH DRIVERS:
The company has emerged an integrated player in chlor-alkali space with investments in downstream chemicals to utilise the chlorine produced.The company has regularly expanded caustic soda capacities from 51,000 TPA in FY05 to 105,000 TPA by FY09 and plans to expand it further. Last year,the company also commissioned 17,000 TPA bleaching powder plant. Being a commodity chemical,caustic soda prices are cyclical in nature.The capacity addition reached a peak in FY09 when demand growth slowed down.As a result,the prices of caustic soda fell around 20% in FY10 against the year-ago period. However,with the worst over,the demand as well as prices of caustic soda is expected to stabilise and improve in the coming years.
Improving capacity utilisation and capacity addition in the pulp and paper,textiles and aluminium industry is expected to improve demand for caustic soda as global economic recovery picks up.
FINANCIALS:
ABCILs net profit grew at a cumulative annual growth rate (CAGR) of 45.7% between FY03 and FY08,but has stagnated in the past two years.Though the company posted a 45.8% rise in profits in the first half of FY10,it fell 67% in the quarter ended December 2009 as the company was closed for a planned maintenance.
In the past five years,the company has maintained its operating profit margin above 40% and the net profit margin above 23%. Its return on capital employed (RoCE) also has consistently remained above 20% in the past five years. The company has consistently brought down its debt for the past four years,which if adjusted for cash,fell below one-tenth of its net worth for FY09. Considering its strong operating cash flows,the company could end up with more cash than its outstanding debt when it closes its accounts for FY10.
STOCK VALUATIONS:
ABCILs shares are currently trading at 3.8 times its earnings for the past 12 months.
The scrip is trading at 25% discount to its FY09 book value. The company has historically distributed less than 10% of its profits as dividends,which was Rs 1.5 per share for FY09.At the current market price,this gives a yield of 1.9%.
RISKS:
The companys profit growth could get prolonged if the global economic growth stagnates.Higher coal prices or a jump in cheap imports could keep the industry outlook negative for a while.
Although the company is operating in an industry that is currently in a downturn,long-term investors can consider the stock to benefit from the next upturn.
BUSINESS:
Aditya Birla Chemicals (India) (ABCIL),which was earlier known as Bihar Caustic,is a 51.3% subsidiary of Hindalco Industries with other promoter group companies holding additional 5%.The company is a leading producer of inorganic chemicals,such as caustic soda, chlorine, hydrogen and their derivatives including hydrochloric acid,aluminium chloride and bleaching powder. The company has its 105,000 tonne per annum (TPA) caustic soda plant along with 30MW captive power plant in Jharkhand. Caustic soda is used in industries such as pulp and paper,textiles,aluminium and detergents and the company has leading players like Hindalco,Balco,SRF,HUL and JK Paper as its clients.
GROWTH DRIVERS:
The company has emerged an integrated player in chlor-alkali space with investments in downstream chemicals to utilise the chlorine produced.The company has regularly expanded caustic soda capacities from 51,000 TPA in FY05 to 105,000 TPA by FY09 and plans to expand it further. Last year,the company also commissioned 17,000 TPA bleaching powder plant. Being a commodity chemical,caustic soda prices are cyclical in nature.The capacity addition reached a peak in FY09 when demand growth slowed down.As a result,the prices of caustic soda fell around 20% in FY10 against the year-ago period. However,with the worst over,the demand as well as prices of caustic soda is expected to stabilise and improve in the coming years.
Improving capacity utilisation and capacity addition in the pulp and paper,textiles and aluminium industry is expected to improve demand for caustic soda as global economic recovery picks up.
FINANCIALS:
ABCILs net profit grew at a cumulative annual growth rate (CAGR) of 45.7% between FY03 and FY08,but has stagnated in the past two years.Though the company posted a 45.8% rise in profits in the first half of FY10,it fell 67% in the quarter ended December 2009 as the company was closed for a planned maintenance.
In the past five years,the company has maintained its operating profit margin above 40% and the net profit margin above 23%. Its return on capital employed (RoCE) also has consistently remained above 20% in the past five years. The company has consistently brought down its debt for the past four years,which if adjusted for cash,fell below one-tenth of its net worth for FY09. Considering its strong operating cash flows,the company could end up with more cash than its outstanding debt when it closes its accounts for FY10.
STOCK VALUATIONS:
ABCILs shares are currently trading at 3.8 times its earnings for the past 12 months.
The scrip is trading at 25% discount to its FY09 book value. The company has historically distributed less than 10% of its profits as dividends,which was Rs 1.5 per share for FY09.At the current market price,this gives a yield of 1.9%.RISKS:
The companys profit growth could get prolonged if the global economic growth stagnates.Higher coal prices or a jump in cheap imports could keep the industry outlook negative for a while.
IDEA Cellular - Stock Analysis
This telecom sector stock has recovered from its lows in February 2010 and has witnessed a renewed buying in the overall buoyant market.
IDEA Cellulars stock has underperformed the benchmark indices over the past six months following the investor concerns over the lower-tariff regime in the domestic telecom space and increasing competition from new entrants.
BUSINESS:
Similar to its bigger peers,such as Bharti Airtel and Reliance Communications, Idea Cellular, the country's sixth largest mobile service provider,has become a pan-India telecom player with presence in all the 22 circles.In the current fiscal,the telco added seven circles in its repertoire.
With 62.1 million customers at the end of February 2009,Idea commands a 10.7% market share of the countrys total subscriber base of 579.3 million.It has been adding over 2.2 million users every month,one of the fastest in the sector.
Idea operates the circles of Punjab and Karnataka through its subsidiary Spice Communications,in which it had acquired a 41.1% stake in 2008.Idea also holds 16% in telecom tower company,Indus Towers,along with other two shareholders,including Bharti Infratel and Vodafone Essar.Effective from January 1,2009,the telco transferred its passive infrastructure in nine circles to its subsidiary ICTIL.
STOCK FINANCIALS:
The Aditya Birla Group-controlled Ideas business has grown rapidly since the financial year 2005.Revenue has grown at a fouryear compounded annual growth rate (CAGR) of 48% and net profit has increased by 84.6%.
In the quarter ended December 2009,the company reported a robust sequential growth of 6% in sales at Rs 3,149.5 crore.Its profit before interest,depreciation and tax remained stable at Rs 814.1 crore.At Rs 170,net profit dropped by 23% compared to that in the previous quarter. Its operating margin in the 11 established circles remained constant at over 30%.This is despite a 10% sequential drop in per minute realisation due to the tariff cuts.A 4% jump in per user minutes of usage (MoU) supported margins.
GROWTH PROSPECTS:
Idea has launched its operations in the seven services during the nine months ended December 2009.These operations initially will be loss making thereby reducing overall profitability of the company.However,as the company wins more subscribers and its operations stabilise in these circles over a period of time,this would improve its bottom line.Also,now that the company is a pan-India player,its capital expenditure on 2G technologies would taper down gradually while its revenue and profits reflect growth from its new operations.
CONCERNS:
Erosion in realisations on per user and per minute basis,rising percentage of subscriber outflow or churn and widening loss of its subsidiary,Spice Communications,are the major concerns that may continue to cast a shadow on Ideas performance in the short term.
STOCK VALUATIONS:
At the current price of about Rs 65,Ideas enterprise value is 7.2 times its earnings before interest,depreciation and taxes.Its valuation lies between that of the countrys largest telco Bharti Airtel (7.4) and the second biggest player RCOM (6.1).
Based on P/E multiples,Ideas stock with a P/E of 21 looks expensive than its peers Bharti (12.5) and RCOM (6.6).This needs to be seen in the backdrop of the fact that its profit had suffered in the past four quarters due to losses from its new service launches.The situation is expected to change gradually as the company starts generating more business from these circles.Mobile number portability (MNP) is likely to be launched in the next three months.
Though its exact impact is difficult to ascertain at the moment,Idea is expected to weather the storm given its national presence and good branding strategy. The stock is likely to see some weakness in the near term due to uncertainties over MNP and the launch of 3G services. However,investors can use dips in the stocks price to buy stocks with a horizon of two years.
Source: ET Investor's Guide
IDEA Cellulars stock has underperformed the benchmark indices over the past six months following the investor concerns over the lower-tariff regime in the domestic telecom space and increasing competition from new entrants.
BUSINESS:
Similar to its bigger peers,such as Bharti Airtel and Reliance Communications, Idea Cellular, the country's sixth largest mobile service provider,has become a pan-India telecom player with presence in all the 22 circles.In the current fiscal,the telco added seven circles in its repertoire.
With 62.1 million customers at the end of February 2009,Idea commands a 10.7% market share of the countrys total subscriber base of 579.3 million.It has been adding over 2.2 million users every month,one of the fastest in the sector.
Idea operates the circles of Punjab and Karnataka through its subsidiary Spice Communications,in which it had acquired a 41.1% stake in 2008.Idea also holds 16% in telecom tower company,Indus Towers,along with other two shareholders,including Bharti Infratel and Vodafone Essar.Effective from January 1,2009,the telco transferred its passive infrastructure in nine circles to its subsidiary ICTIL.
STOCK FINANCIALS:
The Aditya Birla Group-controlled Ideas business has grown rapidly since the financial year 2005.Revenue has grown at a fouryear compounded annual growth rate (CAGR) of 48% and net profit has increased by 84.6%.
In the quarter ended December 2009,the company reported a robust sequential growth of 6% in sales at Rs 3,149.5 crore.Its profit before interest,depreciation and tax remained stable at Rs 814.1 crore.At Rs 170,net profit dropped by 23% compared to that in the previous quarter. Its operating margin in the 11 established circles remained constant at over 30%.This is despite a 10% sequential drop in per minute realisation due to the tariff cuts.A 4% jump in per user minutes of usage (MoU) supported margins.
GROWTH PROSPECTS:
Idea has launched its operations in the seven services during the nine months ended December 2009.These operations initially will be loss making thereby reducing overall profitability of the company.However,as the company wins more subscribers and its operations stabilise in these circles over a period of time,this would improve its bottom line.Also,now that the company is a pan-India player,its capital expenditure on 2G technologies would taper down gradually while its revenue and profits reflect growth from its new operations.
CONCERNS:
Erosion in realisations on per user and per minute basis,rising percentage of subscriber outflow or churn and widening loss of its subsidiary,Spice Communications,are the major concerns that may continue to cast a shadow on Ideas performance in the short term.
STOCK VALUATIONS:
At the current price of about Rs 65,Ideas enterprise value is 7.2 times its earnings before interest,depreciation and taxes.Its valuation lies between that of the countrys largest telco Bharti Airtel (7.4) and the second biggest player RCOM (6.1).
Based on P/E multiples,Ideas stock with a P/E of 21 looks expensive than its peers Bharti (12.5) and RCOM (6.6).This needs to be seen in the backdrop of the fact that its profit had suffered in the past four quarters due to losses from its new service launches.The situation is expected to change gradually as the company starts generating more business from these circles.Mobile number portability (MNP) is likely to be launched in the next three months.Though its exact impact is difficult to ascertain at the moment,Idea is expected to weather the storm given its national presence and good branding strategy. The stock is likely to see some weakness in the near term due to uncertainties over MNP and the launch of 3G services. However,investors can use dips in the stocks price to buy stocks with a horizon of two years.
Source: ET Investor's Guide
Subscribe to:
Posts (Atom)